tag:blogger.com,1999:blog-89772755129371328642017-03-23T18:26:50.853-07:00free associationeconomics, politics, gold, and silver, from an anarcho-capitalist point of viewDr Ghttps://plus.google.com/110027074384450862611noreply@blogger.comBlogger381125tag:blogger.com,1999:blog-8977275512937132864.post-76949421156207331282013-02-19T10:26:00.001-08:002013-02-19T10:26:28.647-08:00<span style="font-family: Calibri;"><strong>NRA and NICS</strong>The National Rifle Association supported the establishment of the National Criminal Instant Background Check System (NICS) [1], and we support it to this day.&nbsp; At its creation, we advocated that NICS checks be accurate; fair; and truly instant.&nbsp; The reason for this is that 99% of those who go through NICS checks are law-abiding citizens, who are simply trying to exercise their fundamental, individual Right to Keep and Bear Arms.<br /><br /><b>Dealers</b><br />Since 1986, those engaged in the business of selling firearms for livelihood and profit have been required to have a Federal Firearms License (FFL).&nbsp; All retail sales of firearms currently require a NICS check, no matter where they occur.<br /><br /><b>Private Sales</b><br />Regarding the issue of private firearms sales, it is important to note that since 1968, it has been a federal felony for any private person to sell, trade, give, lend, rent or transfer a gun to a person he either knows or reasonably should know is not legally allowed to purchase or possess a firearm.<br /><br /><b>Mental Health Records and NICS</b><br />According to a recent General Accounting Office study, as of 2011 23 states and the District of Columbia submitted less than 100 mental health records to NICS; 17 states submitted less than ten mental health records to NICS; and four states submitted no mental health records to NICS.[2]<br /><br /><b>Gun Shows</b><br />A common misrepresentation is that criminals obtain firearms through sales at gun shows.<br /><br />A 1997 Bureau of Justice Statistics survey of state prison inmates who had used or possessed firearms in the course of their crimes found that 79 percent acquired their firearms from “street/illegal sources” or “friends or family.”<br />Only 1.7 percent obtained firearms from anyone (dealer or non-dealer) at a gun show or flea market.[3]<br /><br /><b _yuid="yui_3_1_1_2_1361286983231484">Prosecutions</b><br />In 2010, the FBI denied 72,659 NICS checks out of a total of 14,409,616.&nbsp; But only 62 of these cases were actually prosecuted, and only 13 resulted in a conviction.[4]<br /><br /><b>“Universal Background Checks”</b><br />While the term “universal background checks” may sound reasonable on its face, the details of what such a system would entail reveal something quite different.&nbsp;&nbsp; A mandate for truly “universal” background checks would require every transfer, sale, purchase, trade, gift, rental, or loan of a firearm between all private individuals to be pre-approved by the federal government.&nbsp; In other words, it would criminalize all private firearms transfers, even between family members or friends who have known each other all of their lives.<br /><br />According to a January 2013 report from the U.S. Department of Justice’s National Institute of Justice, the effectiveness of “universal background checks” depends on requiring gun registration.[5]&nbsp; In other words, the only way that the government could fully enforce such a requirement would be to mandate the registration of all firearms in private possession – a requirement that has been prohibited by federal law since 1986.</span>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-17672160689853930232013-01-01T11:38:00.001-08:002013-01-01T11:38:26.384-08:00The political superstorm that devastated New York<a href="http://www.cfact.org/2013/01/01/the-political-superstorm-that-devastated-new-york/">The political superstorm that devastated New York</a>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-2047712046261106382012-11-21T12:55:00.001-08:002012-11-21T12:55:52.746-08:00Is Capitalism "Pro-Business?" | LearnLiberty<a href="http://learnliberty.org/videos/capitalism-pro-business#.UK0_zvpXCIg.blogger">Is Capitalism "Pro-Business?" | LearnLiberty</a>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-23204625109808246252012-10-08T21:02:00.001-07:002012-10-08T21:02:29.062-07:00<a href="http://commodityhq.com/2012/the-top-100-gold-blogs/">http://commodityhq.com/2012/the-top-100-gold-blogs/</a>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-69621345754404263812012-09-10T19:50:00.001-07:002012-09-10T19:50:26.251-07:00Preparing for the Fall | Bob Hoye | Safehaven.com<a href="http://www.safehaven.com/article/26859/preparing-for-the-fall#.UE6m29p5rAc.blogger">Preparing for the Fall | Bob Hoye | Safehaven.com</a>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-42471868363084138852012-08-30T09:07:00.001-07:002012-08-30T09:07:31.883-07:00Gun Control — on the Government's Guns - George Reisman - Mises Daily<a href="http://mises.org/daily/6172/Gun-Control-on-the-Governments-Guns#.UD-PvZphMvY.blogger">Gun Control — on the Government's Guns - George Reisman - Mises Daily</a>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-6014249417235781252012-08-30T06:56:00.001-07:002012-08-30T06:56:21.449-07:00The End of Sound Money and the Triumph of Crony Capitalism - David Stockman - Mises Daily<a href="http://mises.org/daily/5113/The-End-of-Sound-Money-and-the-Triumph-of-Crony-Capitalism#.UD9w_cMMH74.blogger">The End of Sound Money and the Triumph of Crony Capitalism - David Stockman - Mises Daily</a>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-85148197513260546622012-08-29T08:11:00.001-07:002012-08-29T08:11:42.876-07:00<div class="display_date">August 28, 2012</div><div class="hoover_custom_breadcrumb"><div class="breadcrumb"><a href="http://www.hoover.org/publications/defining-ideas">defining ideas</a></div></div><h2 class="title">Paul Ryan’s Intellectual Muse</h2><div class="byline">by <span class="bold"><a href="http://www.hoover.org/fellows/10027">Richard A. Epstein</a></span> (Peter and Kirsten Bedford Senior Fellow and member of the Property Rights, Freedom, and Prosperity Task Force)</div><div class="content" jquery1346252913088="18">The wisdom of Hayek is exactly what this country needs right now. <hr />My last column for Defining Ideas, “<a href="http://www.hoover.org/publications/defining-ideas/article/125891"><span style="color: windowtext;">Franklin Delano Obama</span></a>,” stressed the dangers of Franklin Roosevelt’s “Second Bill of Rights,” which was long on rights but short on any articulation of their correlative duties. Roosevelt’s program works well everywhere except in a world of scarce resources, which, alas, is the only world we will ever know.<br />Fortunately, Roosevelt quickly met with some determined intellectual resistance. In 1944, when Roosevelt unveiled his “Second Bill of Rights,” <a href="http://www.econlib.org/library/Enc/bios/Hayek.html"><span style="color: windowtext;">Friedrich von Hayek</span></a>, an Austrian economist, political theorist, and future Nobel Prize winner, wrote <a href="http://www.amazon.com/The-Road-Serfdom-Documents-The-Definitive/dp/0226320553"><em><span style="color: windowtext;">The Road To Serfdom</span></em><span style="color: windowtext;">.</span></a> That book rightly became a sensation both in England and in the United States, especially after the publication of its condensed version in <a href="http://www.barefootsworld.net/serfdom.html"><span style="color: windowtext;">The Reader’s Digest</span></a> in April 1945. Hayek’s basic message was the exact opposite of Roosevelt’s. He was deeply suspicious of government intervention into markets, thinking that it could lead to economic stagnation on the one hand and to political tyranny on the other.<br /><div class="image small-font" style="width: 400px;">&nbsp;<img alt="Epstein" src="http://media.hoover.org/images/epsteinportrait12082010.jpg?size=medium" /> <br />&nbsp;Illustration by Barbara Kelley </div>Hayek has never been out of the news. But, right now, his name has been batted around in political circles because Paul Ryan, the Republican Vice-Presidential nominee, has acknowledged that he regards Hayek as one of his intellectual muses. That observation brought forward in the New York Times an ungracious <a href="http://www.nytimes.com/2012/08/26/magazine/prime-time-for-paul-ryans-guru-the-one-thats-not-ayn-rand.html?_r=3&amp;ref=itstheeconomy"><span style="color: windowtext;">critique</span></a> (called “Made in Austria” in the print edition) of both Hayek and Ryan by <a href="http://www.npr.org/people/4646803/adam-davidson"><span style="color: windowtext;">Adam Davidson</span></a>, a co-founder of NPR’s Planet Money. Davidson’s essay reveals a profound misunderstanding of Hayek’s contribution to twentieth-century thought in political economy.<br />Davidson leads with a snarky and inaccurate comment that, “A few years ago, it was probably possible to fit every living Hayekian into a conference room.” But it is utterly inexcusable to overlook, as Davidson does, Hayek’s enduring influence.&nbsp; A year after the <em>Road to Serfdom </em>came out, Hayek published his 1945 masterpiece in the American Economics Review, “<a href="http://emilyskarbek.com/uploads/The_Use_of_Knowledge_in_Society_-_Hayek.pdf"><span style="color: windowtext;">The Use of Knowledge in Society</span></a>,” which has been cited over 8,600 times. In this short essay, Hayek explained how the price system allows widely dispersed individuals with different agendas and preferences to coordinate their behaviors in ways that move various goods and services to higher value uses.<br />Alas, Davidson’s dismissive account of Hayek does not mention even one of Hayek’s major contributions to weaning the United States and Great Britain from the vices of centralized planning. Thus Hayek’s 1940 contribution to the <a href="http://www.jstor.org/discover/10.2307/2548692?uid=3739832&amp;uid=2&amp;uid=4&amp;uid=3739256&amp;sid=21101004042373"><span style="color: windowtext;">“Socialist Calculation</span></a>” debate debunked the then-fashionable notion that master planners could achieve the economic nirvana of running a centralized economy in which they obtain whatever distribution of income they choose while simultaneously making sound allocations of both labor and capital, just like in Soviet Russia.<br />Hayek exposed this fool’s mission by stressing how no given individual or group could obtain and organize the needed information about supply and demand conditions throughout the economy. The virtue of the price system was its use of a common unit of measurement—money—to allow various actors to compete for a given resource without having to lay bare why they need any particular good or service. The seller need only accept the highest bid, without nosing around in other people’s business. The interaction between buyers and sellers allows for constant incremental adjustments of both price and quantity. Old information gets updated in a quick&nbsp;and reliable way, thereby eluding the administrative gauntlet of the socialist state.<br /><strong>Hayek vs. the Academic Establishment</strong><br />To put Hayek’s sophistication in perspective, just contrast his work with the dominant intellectual attitudes of the time. One of Hayek’s many shrewd observations in <em>The Road to Serfdom </em>was that a public highway system succeeds because the government only sets the rules of the road while allowing individual choices to determine the composition of the traffic.<br />That position was in fact not altogether true in the United States at the time, for the Interstate Commerce Commission issued licenses, thus determining which trucker could carry tomatoes from San Francisco to Chicago; and the Civil Aeronautics Board determined which airline carriers could fly passengers from New York to Boston. That government control over routes resulted, predictably, in the cartelization of these key markets, which in turn led to higher costs and fewer choices for consumers.<br />Yet this dubious system received spirited intellectual support from people who should have known better. For example, in the pivotal 1943 case of <a href="http://www.bc.edu/bc_org/avp/cas/comm/free_speech/nbcvus.html"><em><span style="color: windowtext;">National Broadcasting Company v. United States</span></em></a>, Justice (and former Harvard Law professor) Felix Frankfurter examined what it meant for the Federal Communications Commission to assign frequencies to different broadcasters serving the “public interest, convenience or necessity.” Like the progressive he was, Frankfurter committed, in a few terse paragraphs, all the intellectual sins against which Hayek inveighed.<br />Frankfurter thought himself too sophisticated to accept the laissez-faire position that the FCC should be treated “as a kind of traffic officer, policing the wave lengths to prevent stations from interfering with each other.” His grander vision “puts upon the Commission the burden of determining the composition of that traffic,” because “the facilities of radio are not large enough to accommodate all who wish to use them.”<br />Frankfurter’s view was a disastrous mistake precisely because no one at the FCC ever had any idea of who should get which frequency and for what purpose. The FCC’s endless comparative hearings, first to allocate unused frequencies for limited periods of time, and then to pass on renewal licenses, were exercises in futility. Was it more important for a licensee to commit to broadcasting public affairs shows or to have strong ties to the local community? Endless hours of deliberation squandered precious public resources on the impossible instead of just selling off these frequencies by auction.<br />Ironically, in the end, markets did correct the foolishness of these administrative assignments, for the FCC rules let the lucky recipient of the initial license sell it off after waiting a year, thus pocketing revenues that should have gone into the public treasury. Just removing the middleman could have stopped the charade. The errors of Frankfurter’s reasoning were first exposed by a law student, <a href="http://www.milkeninstitute.org/publications/review/2003_12/09_15mr20.pdf"><span style="color: windowtext;">Leo Herzel</span></a><span style="color: windowtext;">,</span> in 1951, and then by the Nobel Prize–winning economist <a href="http://www.coase.org/coaseonline.htm"><span style="color: windowtext;">Ronald Coase</span></a> in his classic article on the <a href="http://old.ccer.edu.cn/download/7874-1.pdf"><span style="color: windowtext;">Federal Communication Commission</span></a>. Auctions have become routine for the FCC spectrum today. Score one for Hayek, zero for Frankfurter.<br /><strong>Monopolies and Competition </strong><br />A second influential illustration of how far off the mark academics were on the operation of markets was Friedrich Kessler’s article in the 1943 issue of the Columbia Law Review, “Contracts of Adhesion—Some Thoughts about Freedom of Contract” (Kessler was one of my professors at Yale Law School). Written during the middle of World War II, Kessler, a German refugee and contracts scholar of great distinction, took it upon himself to warn the United States of the dangers that standardized contracts posed to the economic marketplace and to the health and safety of society as a whole.<br />The phrase “contract of adhesion” was meant to show that the party who wrote the standard form for the other party gave only a take-it-or-leave-it choice. From that observation, Kessler claimed, freedom of contract was only a “one-sided” privilege, which allowed “enterprisers to legislate by contract . . . in a substantially authoritarian manner,” given the “innate trend of competitive capitalism toward monopoly.”<br />The clear implication of Kessler’s warning was that massive government intervention had to counteract the power of private legislation. Missing from his analysis, however, was any explanation as to why competition had to move to monopoly, for, as Hayek rightly stressed, any system that allows free entry of new firms will prevent established firms from raising their prices above the competitive level. Nor should the standard form contract in a competitive industry be thought of as anything other than a transaction costs–saving device that helps sellers and consumers alike.<br />A standard form contract reduces the time for dickering, and it leaves consumers with the option to just say no if the price is too high. Naïve customers who use these contracts enjoy some added confidence that they have gotten the same deal as established customers. The dangers of monopoly do not arise from standardization, but from collusion, which the antitrust laws can address. Kessler’s views unfortunately spurred on a wave of anticompetitive consumer protection laws, which raised prices and reduced innovation, by putting new entrants at a tactical disadvantage relative to the incumbents who are better equipped to jump through regulatory hoops.<br />The last of my three illustrations is George Orwell’s respectful but critical <a href="http://thomasgwyndunbar.wordpress.com/2008/10/09/george-orwell-review/"><span style="color: windowtext;">book review</span></a> of <em>The Road to Serfdom</em>. Orwell claimed that Hayek “does not see, or will not admit, that a return to ‘free’ competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State. The trouble with competitions is that somebody wins them.”&nbsp;Actually people keep entering competitions in order to win. But what Orwell never grasped was that his example ignores the key fact that voluntary contracts produce win/win results.<br />The party who loses the race may well have enjoyed the competition. Or, he may have calculated from the <em>ex ante</em> perspective that the chances of winning justified the risk that he took. What is so tragic about Orwell’s remark is that it lends credence to the dangerous proposition that all business deals produce only some winners but many losers, which of course gives a handy and ubiquitous reason for regulating them all.<br /><strong>Hayek vs. Hayek</strong><br />Hayek then was light years ahead of his contemporaries in understanding how a market economy ought to work. To be sure, Hayek wrote many things that have been subject to revision. Hayek placed too much faith in local knowledge and individual intuition as sources for rationality in market places. It turns out that the decentralized use of formal business strategies backed by large data sets can displace, and in financial markets often has displaced, the unguided seat-of-the-pants trader. Hayek also placed too much faith in the powers of “spontaneous order” to produce optimal market results. He failed to note how market success often depends on the use of intermediate institutions, often private in nature, to set and revise the customs and conventions under which trading takes place.<br />Most ironically, Hayek was too skeptical of government central planning to decide, for example, the location of public highways and parks: Planning public spaces is a tractable problem even if planning an entire economy is not. To be sure, the English Constitution developed over centuries by a combination of decisive moments (the <a href="http://www.constitution.org/eng/magnacar.htm"><span style="color: windowtext;">Magna Carta</span></a> of 1215 and <a href="http://avalon.law.yale.edu/17th_century/england.asp"><span style="color: windowtext;">the Bill of Rights of 1689</span></a>, for example). But the American Constitution was “constructed” in a form that did not fit the Hayekian prescription for a sound gradualist political order.<br />And, most of all, Hayek did not see that his support for unemployment insurance and publicly provided health care could produce programs far larger and more dangerous than could be imagined, which led me to warn against the dangers of “<a href="http://www.theatlantic.com/daily-dish/archive/2009/10/was-hayek-a-socialist/194755/"><span style="color: windowtext;">Hayekian Socialism</span></a>.” Even the devoted Hayekians who dispute that charge know that Davidson was just wrong when he attributed to Hayek “an unfettered faith in the free market and objection to big government.” What Hayek actually believed in was strength of markets subject to a cautious willingness to accept limited government. On that premise, Paul Ryan has indeed chosen the right intellectual forebear.<br /><hr /><div><div>Richard A. Epstein, the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution, is the Laurence A. Tisch Professor of Law, New York University Law School, and a senior lecturer at the University of Chicago. His areas of expertise include constitutional law, intellectual property, and property rights. His most recent books are <i>Design for Liberty: Private Property, Public Administration, and the Rule of Law</i> (2011), <a href="http://www.hoover.org/publications/defining-ideas/article/“http://www.hooverpress.org/productdetails.cfm?PC=1351”"><i>The Case against the Employee Free Choice Act</i></a> (Hoover Press, 2009) and <i>Supreme Neglect: How to Revive the Constitutional Protection for Private Property</i> (Oxford Press, 2008).</div></div></div>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-51322691381323484072012-08-29T07:28:00.001-07:002012-08-29T07:28:52.139-07:00according to the Boston Consulting Group's study of global wealth, in 2011 American households with investment assets of $1 million or more declined to 5,134,000 from 5,263,000 (by 129,000), while globally the number grew by 175,000. Singapore has the highest proportion of millionaires in the world: 17 percent of all households in Singapore have wealth of over $1 million, as compared to 4.3 percent of households in the United States, which ranks it seventh in the world.<a class="noteref" href="http://mises.org/daily/6160/Obamas-Keynesian-Giraffes#note12" name="ref12">[12]</a><br /><br />from<br /><br /><a href="http://mises.org/daily/6160/Obamas-Keynesian-Giraffes">http://mises.org/daily/6160/Obamas-Keynesian-Giraffes</a>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-89484163920042769032012-08-27T12:04:00.001-07:002012-08-27T12:04:45.067-07:00<h1 align="center"><b><b><b><b><b><b><b><b><b><b><b><b><span style="font-family: Georgia, Times New Roman, Times, serif;"><b></b></span><span style="font-family: Times New Roman, Times, serif;">Ron Paul and the Future</span></b></b></b></b></b></b></b></b></b></b></b></b></h1><div align="center"><span style="font-family: Times New Roman, Times, serif; font-size: small;"><b>by <a href="mailto:lew@lewrockwell.com">Llewellyn H. Rockwell, Jr.</a></b></span></div><div align="center"><!-- AddThis Button BEGIN --><a href="http://www.addthis.com/bookmark.php"><img alt="" border="0" height="16" src="http://s7.addthis.com/static/btn/lg-share-en.gif" width="125" /></a> <!-- AddThis Button END --></div><table align="right" border="0" cellpadding="0" cellspacing="0" style="width: 315px;"><tbody><tr><td width="15">&nbsp;</td><td><div align="right"><div id="google_ads_div_B2"><ins style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; height: 250px; position: relative; width: 300px;"><ins style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; display: block; height: 250px; position: relative; width: 300px;"><iframe allowtransparency="allowtransparency" frameborder="0" height="250" id="google_ads_iframe_B2" marginheight="0" marginwidth="0" name="google_ads_iframe_B2" scrolling="no" src="about:blank" style="border-bottom: 0px; border-left: 0px; border-right: 0px; border-top: 0px; left: 0px; position: absolute; top: 0px;" width="300"></iframe></ins></ins></div></div></td></tr><tr><td width="15">&nbsp;</td><td>&nbsp;</td></tr></tbody></table><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">One of the most thrilling memories of the 2012 campaign was the sight of those huge crowds who came out to see Ron. His competitors, meanwhile, couldn’t fill half a Starbucks. When I worked as Ron’s chief of staff in the late 1970s and early 1980s, I could only dream of such a day.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">Now what was it that attracted all these people to Ron Paul? He didn’t offer his followers a spot on the federal gravy train. He didn’t pass some phony bill. In fact, he didn’t do any of the things we associate with politicians. What his supporters love about him has nothing to do with politics at all.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">Ron is the anti-politician. He tells unfashionable truths, educates rather than flatters the public, and stands up for principle even when the whole world is arrayed against him.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">Some people say, "I love Ron Paul, except for his foreign policy." But that foreign policy reflects the best and most heroic part of who Ron Paul is. Peace is the linchpin of the Paulian program, not an extraneous or dispensable adjunct to it. He would never and could never abandon it.</span><br /><table align="right" border="0" cellpadding="0" cellspacing="0" style="width: 135px;"><tbody><tr><td><div align="right"><iframe frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=lewrockwell&amp;o=1&amp;p=8&amp;l=as1&amp;asins=1933550201&amp;nou=1&amp;ref=tf_til&amp;fc1=000000&amp;IS2=1&amp;lt1=_blank&amp;m=amazon&amp;lc1=0000FF&amp;bc1=FFFFFF&amp;bg1=FFFFFF&amp;f=ifr" style="height: 240px; width: 120px;"></iframe></div></td></tr></tbody></table><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">Here was the issue Ron could have avoided had he cared only for personal advancement.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">But he refused. No matter how many times he’s been urged to keep his mouth shut about war and empire, these have remained the centerpieces of his speeches and interviews. </span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">Of course, Ron Paul deserves the Nobel Peace Prize. In a just world, he would also win the Medal of Freedom, and all the honors for which a man in his position is eligible.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">But history is littered with forgotten politicians who earned piles of awards handed out by other politicians. What matters to Ron more than all the honors and ceremonies in the world is all of you, and your commitment to the immortal ideas he has championed all his life.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">It’s Ron’s truth-telling and his urge to educate the public that should inspire us as we carry on into the future.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">It isn’t a coincidence that governments everywhere want to educate children. Government education, in turn, is supposed to be evidence of the state’s goodness and its concern for our well-being. The real explanation is less flattering. If the government’s propaganda can take root as children grow up, those kids will be no threat to the state apparatus. They’ll fasten the chains to their own ankles.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">H.L. Mencken once said that the state doesn’t just want to make you obey. It tries to make you <i>want</i> to obey. And that’s one thing the government schools do very well.</span><br /><table align="right" border="0" cellpadding="0" cellspacing="0" style="width: 135px;"><tbody><tr><td><div align="right"><iframe frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=lewrockwell&amp;o=1&amp;p=8&amp;l=as1&amp;asins=0945466382&amp;nou=1&amp;ref=tf_til&amp;fc1=000000&amp;IS2=1&amp;lt1=_blank&amp;m=amazon&amp;lc1=0000FF&amp;bc1=FFFFFF&amp;bg1=FFFFFF&amp;f=ifr" style="height: 240px; width: 120px;"></iframe></div></td></tr></tbody></table><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">A long-forgotten political thinker, Etienne de la Boetie, wondered why people would ever tolerate an oppressive regime. After all, the people who are governed vastly outnumber the small minority doing the governing. So the people governed could put a stop to it all if only they had the will to do so. And yet they rarely do.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">De la Boetie concluded that the only way any regime could survive was if the public consented to it. That consent could range all the way from enthusiastic support to stoic resignation. But if that consent were ever to vanish, a regime’s days would be numbered.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">And that’s why education – real education – is such a threat to any regime. If the state loses its grip over your mind, it loses the key to its very survival.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">The state is beginning to lose that grip. Traditional media, which have carried water for the government since time began, it seems, are threatened by independent voices on the Internet. I don’t think anyone under 25 even reads a newspaper.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">The media and the political class joined forces to try to make sure you never found out about Ron Paul. When that proved impossible, they smeared him, and told you no one could want to go hear Ron when they could hear Tim Pawlenty or Mitt Romney instead.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">All this backfired. The more they panicked about Ron, the more drawn to him people were. They wanted to know what it was that the Establishment was so eager to keep them from hearing.</span><br /><table align="right" border="0" cellpadding="0" cellspacing="0" style="width: 135px;"><tbody><tr><td><div align="right"><iframe frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=lewrockwell&amp;o=1&amp;p=8&amp;l=as1&amp;asins=1455501441&amp;nou=1&amp;ref=tf_til&amp;fc1=000000&amp;IS2=1&amp;lt1=_blank&amp;m=amazon&amp;lc1=0000FF&amp;bc1=FFFFFF&amp;bg1=FFFFFF&amp;f=ifr" style="height: 240px; width: 120px;"></iframe></div></td></tr></tbody></table><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">Ours is the most radical challenge to the state ever posed. We aren’t trying to make the state more efficient, or show how it can take in more revenue, or change its pattern of wealth redistribution. We’re not saying that this subsidy is better than that one, or that this kind of tax would make the system run more smoothly than that one. We reject the existing system root and branch.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">And we don’t oppose the state’s wars because they’ll be counterproductive or overextend the state’s forces. We oppose them because mass murder based on lies can never be morally acceptable.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">So we don’t beg for scraps from the imperial table, and we don’t seek a seat at that table. We want to knock the table over. </span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">We have much work to do. Countless Americans have been persuaded that it’s in their interest to be looted and ordered around by a ruling elite that in fact cares nothing for their welfare and seeks only to increase its power and wealth at their expense.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">The most lethal and anti-social institution in history has gotten away with describing itself as the very source of civilization. From the moment they set foot in the government’s schools, Americans learn that the state is there to rescue them from poverty, unsafe medicines, and rainy days, to provide economic stimulus when the economy is poor, and to keep them secure against shadowy figures everywhere. This view is reinforced, in turn, by the broadcast and print media.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">If the public has been bamboozled, as Murray Rothbard would say, it is up to us to do the de-bamboozling. We need to tear the benign mask off the state.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">That is the task before you, before all of us, here today.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">Begin with yourself. Learn everything you can about a free society. Read the greats, like Frederic Bastiat, Ludwig von Mises, and Murray Rothbard. As you delve into the literature of liberty, share what you’re reading and learning. Start a blog. Create a YouTube channel. Organize a reading group. But whatever you do, learn, spread what you’re learning, and never stop.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;"><img align="right" height="230" hspace="15" src="http://lewrockwell.com/rockwell/lew2012-175a.jpg" vspace="7" width="175" />If it is through propaganda that people thoughtlessly accept the claims of the state, then it is through education that people must be brought to their senses.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">With its kept media on the wane, it is going to be more and more difficult for the state to make its claims stick, to persuade people to keep accepting its lies and propaganda.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">You’ve heard it said that the pen is mightier than the sword. Think of the sword as the state. Think of the pen as all of you, each in your own way, spreading the ideas of liberty.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">Remember that insight of Etienne de la Boetie: all government rests on public consent, and as soon as the public withdraws that consent, any regime is doomed.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;">This is why they fear Ron, it’s why they fear you, and it’s why, despite the horrors we read about every day, we may dare to look to the future with hope.</span><br /><span style="font-family: Times New Roman, Times, serif; font-size: small;"><i>This article is based on remarks delivered at the Paul Festival in Tampa, FL, August 25, 2012.</i></span><br /><div align="right"><span style="font-size: small;"><i><span style="font-family: Times New Roman, Times, serif;">August 27, 2012</span></i></span></div>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-28177211855429558002012-08-14T06:21:00.001-07:002012-08-14T06:22:29.542-07:00<a href="http://lfb.org/today/the-myth-of-the-greater-good/">http://lfb.org/today/the-myth-of-the-greater-good/</a>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-36209153405611054302012-08-07T11:42:00.002-07:002012-08-07T11:42:40.480-07:00I feel sympathy for the victims and families of all violent crime, but is this reaction really appropriate?&nbsp; Would the president have done this if the timing was different, like 2 wks after the election?&nbsp; I could be wrong, but I don't think he did this for the Aurora shootings.&nbsp; Draw your own conclusion.<br /><br /><br /><h1 style="background: #fafafa; margin: 24pt 0in 0pt;"><span lang="EN" style="font-size: 18pt; mso-ansi-language: EN; mso-fareast-font-family: 'Times New Roman';"><span style="color: #365f91;"><span style="font-family: Cambria;">Presidential Proclamation--Honoring the Victims of the Tragedy in Oak Creek, Wisconsin<o:p></o:p></span></span></span></h1><div class="rtecenter" style="background: #fafafa; margin: 0in 0in 13.6pt;"><span lang="EN" style="color: #333333; font-family: 'Arial','sans-serif'; font-size: 9pt; mso-ansi-language: EN;">HONORING THE VICTIMS OF THE TRAGEDY IN OAK CREEK, WISCONSIN<o:p></o:p></span></div><div class="rtecenter" style="background: #fafafa; margin: 0in 0in 13.6pt;"><span lang="EN" style="color: #333333; font-family: 'Arial','sans-serif'; font-size: 9pt; mso-ansi-language: EN;">BY THE PRESIDENT OF THE UNITED STATES OF AMERICA<o:p></o:p></span></div><div class="rtecenter" style="background: #fafafa; margin: 0in 0in 13.6pt;"><span lang="EN" style="color: #333333; font-family: 'Arial','sans-serif'; font-size: 9pt; mso-ansi-language: EN;">A PROCLAMATION<o:p></o:p></span></div><div style="background: #fafafa;"><span lang="EN" style="color: #333333; font-family: 'Arial','sans-serif'; font-size: 9pt; mso-ansi-language: EN;">As a mark of respect for the victims of the senseless acts of violence perpetrated on August 5, 2012, in Oak Creek, Wisconsin, by the authority vested in me as President of the United States by the Constitution and the laws of the United States of America<span style="background: yellow; mso-highlight: yellow;">, I hereby order that the flag of the United States shall be flown at half-staff at the White House and upon all public buildings and grounds, at all military posts and naval stations, and on all naval vessels of the Federal Government in the District of Columbia and throughout the United States and its Territories and possessions until sunset, August 10, 2012.</span>&nbsp; I also direct that the flag shall be flown at half-staff for the same length of time at all United States embassies, legations, consular offices, and other facilities abroad, including all military facilities and naval vessels and stations.<o:p></o:p></span></div><div style="background: #fafafa;"><span lang="EN" style="color: #333333; font-family: 'Arial','sans-serif'; font-size: 9pt; mso-ansi-language: EN;">IN WITNESS WHEREOF, I have hereunto set my hand this sixth day of August, in the year of our Lord two thousand twelve, and of the Independence of the United States of America the two hundred and thirty-seventh.<o:p></o:p></span></div><div class="rtecenter" style="background: #fafafa; margin: 0in 0in 13.6pt;"><span lang="EN" style="color: #333333; font-family: 'Arial','sans-serif'; font-size: 9pt; mso-ansi-language: EN;">BARACK OBAMA<o:p></o:p></span></div>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-61025455455029058572012-07-31T14:24:00.001-07:002012-07-31T14:24:48.547-07:00<div class="post-7199 post type-post status-publish format-standard hentry category-current-events tag-columbine tag-firearms tag-fort-hood tag-james-holmes tag-jared-lee-loughner tag-shooting-rampage tag-virginia-tech" id="post-7199"><h2>Auditing Shooting Rampage Statistics</h2><small>July 31st, 2012</small> &nbsp; Submitted by <a href="https://plus.google.com/110560005875778858366/posts" rel="author external" title="Visit Davi Barker’s website">Davi Barker</a> <center><br /></center><div class="entry"><a href="http://dailyanarchist.com/wp-content/uploads/DA-guns.jpg"><img alt="" class="size-full wp-image-7200 alignright" height="167px" src="http://dailyanarchist.com/wp-content/uploads/DA-guns.jpg" width="227px" /></a>Firearm prohibitionists love to use tragedy to leverage their agenda. So, it’s important for gun rights advocates to stand their ground and fire back (proverbially) whenever this happens.<br />Last week I posted a graphic on Facebook claiming the average number of people killed in mass shootings when stopped by police is 18.25, and the average number of people killed in a mass shooting when stopped by civilians is 2.2. I based it on 10 shootings I found listed on some timeline somewhere. I honestly don’t even remember where. I presented the case studies in a <a href="http://silverunderground.com/2012/07/pop-friday-ice-t-stands-up-for-gun-rights/">blog post on the Silver Circle blog</a>&nbsp;and I did the math myself.<br />The graphic was met with great enthusiasm and much skepticism. Leave it to Facebook users to demand an audit on a meme. So, I started over, only much more meticulous this time. I compiled and analyzed 93 shootings, noting my methodology, and I am now prepared to present my findings, complete with links to the data. But here’s a spoiler… It’s not that different.<br /><span id="more-7199"></span><strong>The average number of people killed in mass shootings when stopped by police is 14.3</strong><br /><strong>The average number of people killed in a mass shooting when stopped by a civilian is 2.3. </strong><br />I was so close! Here’s what I think accounts for the difference. In the first sample there was likely a selection error based on what grabs headlines. Larger shootings get more press, so if you take a small sampling you’re going to be working with a data set of the worst shootings. As for the consistency of the civilian statistic, it makes perfect sense if you think about from inside the mind of a heroic civilian with a concealed carry permit. It goes something like this:<br /><blockquote>BANG!<br />“Holy crap! that guy shot that other guy.”<br />BANG!<br />“He’s just going to keep shooting people.”<br />BANG!</blockquote>And the shooter goes down.<br />Quite a few cases went something like that. In fact, I found only one example of a shooter stopped by civilians who killed more than 3 people. Jared Loughner killed 6 people in Tucson, Arizona before he was tackled by two civilians. Maybe it’d have been less if one of those two men were armed.<br />I want to be perfectly clear. I am not much of a firearms enthusiast. I don’t own a firearm. I’ve only ever been shooting twice. For me it’s not an issue of gun rights. It’s about property rights. A person has a natural right to own a hunk of iron in any damn shape they want, and they shouldn’t be criminalized until they use that hunk of iron to harm someone. People can argue crime statistics ’till they’re blue in face. I frankly don’t care about people’s ideas for managing society.<br />What I am is a math enthusiast, so&nbsp;without further delay, here’s how I arrived at these numbers.<br /><strong>Step One: Amassing a data set</strong><br /><strong></strong>I searched for timelines of shootings and selected 5 that appeared the most comprehensive.<br /><ol><li><a href="http://www.infoplease.com/ipa/A0777958.html">Info Please</a> </li><li><a href="http://www.cnn.com/2012/07/20/us/worst-u-s-shootings-timeline/index.html">CNN</a> </li><li><a href="http://www.denverpost.com/breakingnews/ci_21123777">Denver Post</a> </li><li><a href="http://www.newsmax.com/US/mass-shootings-us-colorado/2012/07/20/id/445971">News Max</a> </li><li><a href="http://www.trutv.com/library/crime/serial_killers/weird/kids1/index_1.html">TruTV</a> </li></ol>While doing this I learned some important vocabulary. A “spree shooting” is when a killer murders in multiple locations with no break between murders. As in the Virginia Tech killer who began shooting in one hall, and then walked across campus and continued shooting in another hall. A “mass shooting” is when a killer murders multiple people, usually in a single location. As in the Fort Hood shooter who killed 13 people at one military base. A “school shooting” can be either of these as long as one or more locations is a school. As in the Columbine shooting, which is also classified as a spree shooting because they went from room to room. The term “rampage shooting” is used to describe all of these, and does not differentiate between them. So that is the term I’ll be using from here on out.<br />I selected these lists because they were the most comprehensive of those that I found, and I was seeking as large a data set as possible. I combined them all, including the first 10 from my previous post, and removed all redundant data for a total list of 93 shootings.<br /><strong>Step Two: Trimming irrelevant data.</strong><br />While the list was comprehensive, the details about each shooting were not. In each shooting I had a date and a location, but often important details, like the number of people killed, or how the shooter was apprehended were missing. So, I set to the long task researching each incident to fill in the missing data. I didn’t incorporate the number of wounded people because so many were not reported. But the reason they call a single death a shooting rampage is because there were many injuries. All relevant data is contained in the links in the finished list below or in the timelines linked above. Most of the data came from either Wikipedia, a mainstream news article about the incident, or a handy resource I discovered called <a href="http://murderpedia.org/">Murderpedia</a>.<br />Next I removed incidents that did not fit within the scope of this analysis. Even though every incident on the list was a shooting, not every incident was a rampage shooting. So, I selected for incidents that included at least some indiscriminate targeting of bystanders. I removed incidents like <a href="http://en.wikipedia.org/wiki/Shooting_of_Kayla_Rolland">Dedric Darnell Owens</a> who shot and killed his classmate Kayla Rolland and then threw his handgun in a wastebasket. And I removed incidents like<a href="http://www.seattlepi.com/local/article/Carnation-suspects-tell-officers-of-victims-1260062.php"> Michele Kristen Anderson</a> who killed her entire family at a Christmas Party. So what remained were specifically rampage shootings in which a killer went someplace public and began firing at random people.<br />Suicide presented a tricky variable in the analysis. Roughly half of the remaining rampage shooters ended their own lives. So, I removed all incidents where the shooter killed themselves before police arrived reasoning that they had killed all they were going to kill and police had no impact in stopping them. Theoretically these incidents could have been stopped sooner by a civilian, but let’s not speculate. What I left in were incidents where shooters commit suicide after engaging the police, either during a shootout with police, or after a chase. I included, for example, <a href="http://murderpedia.org/male.W/w/wong-jiverly.htm">Jiverly Wong</a>, who witnesses say stopped shooting and killed himself as soon as he heard sirens but before police arrived, crediting the police’s response time with stopping the murders. But I did not include the shooters themselves in the total number of people killed.<br />I also removed cases like <a href="http://en.wikipedia.org/wiki/California_State_University,_Fullerton_massacre">Edward Charles Allaway</a> who shot up a library, then fled to a nearby hotel and called police to turn himself in, and cases like <a href="http://savannahnow.com/stories/102400/LOCbeachtrial.shtml">Darrell Ingram</a> who shot up a high school dance and fled the scene only to be apprehended later after a long investigation. I was only looking for incidents when intervention from police or civilian saved lives.<br />What remained was 30 cases of gunmen firing indiscriminately whose rampage was cut short through the intervention of either a civilian or a police officer.<br /><strong>Step Three: The List</strong><br />I divided the remaining cases into two categories, those stopped by police and those stopped by civilians. I included both armed and unarmed civilians for reasons that will become clear in the final analysis. I also removed one final case from the list. <a href="http://en.wikipedia.org/wiki/Tacoma_Mall_shooting">Dominick Maldonado</a> went on a shooting rampage in a shopping mall in Tacoma, Washington, and although he ultimately surrendered to police he was confronted by two legally armed civilians who interrupted his shooting, but did not fire for fear of hitting innocent bystanders. So, I’m calling this one an assist from the civilians and taking it out of the analysis as an anomaly.<br /><ul><li>9/6/1949 -<a href="http://en.wikipedia.org/wiki/Howard_Unruh"> Howard Barton Unruh</a> went on a shooting rampage in Camden, New Jersey with a German Luger. He shot up a barber shop, a pharmacy and a tailor’s shop killing 13 people. He finally surrendered after a shoot-out with police. </li><li>8/1/1966 -<a href="http://en.wikipedia.org/wiki/Charles_Whitman"> Charles Joseph Whitman</a> climbed a tower at the University of Texas in Austin, Texas and began shooting at other students and faculty with a sniper rifle. He killed 16 people before being shot and killed by police. </li><li>7/18/1984 – <a href="http://en.wikipedia.org/wiki/San_Ysidro_McDonald's_massacre">James Oliver Huberty</a> shot up a McDonalds in San Ysidro, California killing 21 people before police shoot and killed him. </li><li>10/16/1991 -&nbsp;<a href="http://en.wikipedia.org/wiki/Luby's_massacre">George Hennard</a> entered Luby’s Cafeteria in Killeen, Texas and began indiscriminately shooting the patrons. He killed 23 people in all. He commit suicide after being cornered and wounded in a shootout with police. </li><li>11/15/1995 – <a href="http://en.wikipedia.org/wiki/Richland_High_School_shooting">Jamie Rouse</a> used a .22-caliber semi-automatic rifle to fire indiscriminately inside Richland High School in Lynnville, Tennessee. He killed 2 people before being tackled by a football player and a coach. </li><li>2/2/1996 -<a href="http://en.wikipedia.org/wiki/Frontier_Middle_School_shooting"> Barry Loukaitis</a> entered Frontier Middle School in Moses Lake, Washington with a rifle and two handguns. He killed 3 people before the Gym teacher, Jon Lane grabbed the rifle and wrestled the gunman to the ground. </li><li>10/1/1997 -&nbsp;<a href="http://www.davekopel.com/2A/OthWr/principal&amp;gun.htm">Luke Woodham</a> put on a trench coat to conceal a hunting rifle and entered Pearl High School in Pearl, Mississippi. He killed 3 students before vice principal Joel Myrick apprehended him with a Colt .45 without firing. </li><li>12/1/1997 -&nbsp;<a href="http://www.trutv.com/library/crime/serial_killers/weird/kids1/index_1.html">Michael Carneal</a> brought a pistol, two rifles and two shotguns to his high school in Paducah, Kentucky and opened fire on a small prayer group killing 3 girls. His rampage was halted when he was tackled by another student. </li><li>4/24/1998 -&nbsp;<a href="http://www.nap.edu/openbook.php?record_id=10370&amp;page=73">Andrew Wurst</a> attended a middle school dance in Edinboro, Pennsylvania intent on killing a bully but shot wildly into the crowd. He killed 1 student. James Strand lived next door. When he heard the shots he ran over with his 12 gauge shotgun and apprehended the gunman without firing. </li><li>5/21/1998 -&nbsp;<a href="http://en.wikipedia.org/wiki/Kip_Kinkel">Kipland Kinkel</a> entered Thurston High School in Springfield, Oregon with two pistols and a semi-automatic rifle hidden under a trench coat. He opened fire killing 2 students, but while reloading a wounded student named Jacob Ryker tackled him. </li><li>4/20/1999 -<a href="http://en.wikipedia.org/wiki/Columbine_High_School_massacre"> Dylan Klebold and Eric Harris</a> were the killers behind the Columbine shooting in Littleton, Colorado. The two both commit suicide after police arrived, but what many people do not know is that the school’s armed security guard and the police all stood and waited outside the library while executions happed right inside. 15 people died, not including the shooters. </li><li>7/31/1999 -<a href="http://en.wikipedia.org/wiki/Mark_O._Barton"> Mark Barton</a> was a daytrader who went on a shooting rampage through two day trading firms in Atlanta, Georgia. He killed 12 people in all and after a police chase he was surrounded by police at a gas station where he commit suicide. </li><li>1/16/2002 – <a href="http://en.wikipedia.org/wiki/Appalachian_School_of_Law_shooting">Peter Odighizuwa</a> opened fire with a handgun at The Appalachian School in Grundy, Virginia. 3 people were killed before the shooter was apprehended by 3 students, Mikael Gross, Ted Besen, and Tracy Bridges with handguns without firing. </li><li>8/27/2003 – <a href="http://murderpedia.org/male.T/t/tapia-salvador.htm">Salvador Tapia</a> entered an auto parts store in Chicago, Illinois and shot and killed 6 people with a handgun. He then waged a gunbattle with police before a SWAT team fatally wounded him. </li><li>9/24/2003 – <a href="http://murderpedia.org/male.M/m/mclaughlin-jason.htm">John Jason McLaughlin</a> brought a .22-caliber pistol to Rocori High School in Cold Spring, Minnesota. He killed 2 people before PE teacher, Mark Johnson confronted him, disarmed him, and held him in the school office for police to arrive. </li><li>2/25/2005 – <a href="http://www.sightm1911.com/lib/ccw/tacoma_tyler.htm">David Hernandez Arroyo Sr.</a> opened fire on a public square from the steps of a courthouse in Tyler, Texas. The shooter was armed with an assault rifle and wearing body armor. Mark Wilson fired back with a handgun, hitting the shooter but not penetrating the armor. Mark drew the shooter’s fire, and ultimately drove him off, but was fatally wounded. Mark was the only death in this incident. </li><li>3/21/2005 – <a href="http://murderpedia.org/male.W/w/weise-jeffrey.htm">Jeff Weise</a> was a student at Red Lake High School in Red Lake, Minnesota. He killed 7 people including a teacher and a security guard. When police cornered him inside the school, he shot and killed himself. </li><li>11/8/2005 – <a href="http://en.wikipedia.org/wiki/Campbell_County_High_School_shooting">Kenneth Bartley, Jr.</a> brought a .22 caliber pistol to Campbell County Comprehensive High School in Jacksboro, Tennessee and killed 1 person before being disarmed by a teacher. </li><li>9/29/2006 – <a href="http://en.wikipedia.org/wiki/Weston_High_School_shooting">Eric Hainstock</a> brought a .22 caliber revolver and a 20-gauge shotgun into Weston High School in Cazenovia, Wisconson. He killed 1 person before staff and students apprehended him and held him until the police arrived. </li><li>4/16/2007 – <a href="http://en.wikipedia.org/wiki/Virginia_Tech_massacre">Seung-Hui Cho</a> was the shooter behind the Virgina Tech shooting in Blacksburg, Virginia. Police apprehend the wrong suspect allowing the shooter to walk across campus and open fire again in a second location. He eventually commit suicide after murdering 32 people. </li><li>9/3/2008 – <a href="http://voices.yahoo.com/shooting-rampage-alger-washington-leaves-six-dead-1892202.html?cat=38">Isaac Zamora</a> went on a shooting rampage in Alger, Washington that killed 6 people, including a motorist shot during a high speed chase with police. He eventually surrendered to police. </li><li>3/29/2009 – <a href="http://articles.cnn.com/2009-03-29/justice/nursing.home.shooting_1_latest-killings-police-officer-mckenzie?_s=PM:CRIME">Robert Stewart </a>went on a killing rampage armed with a rifle, and a shotgun in a nursing home in Carthage, North Carolina. He killed 8 people and was apprehended after a shootout with police. </li><li>4/3/2009 – <a href="http://murderpedia.org/male.W/w/wong-jiverly.htm">Jiverly Wong</a> went on a shooting rampage at a American Civic Association immigration center in Binghamton, New York where he was enrolled in a citizenship class. 13 people were killed before the shooter killed himself. Witnesses say he turned the gun on himself as soon as he heard police sirens approaching. </li><li>11/5/2009 – <a href="http://en.wikipedia.org/wiki/Fort_Hood_shooting">Nidal Malik Hasan</a> was the shooter behind the Fort Hood shooting at a military base just outside Killeen, Texas. The shooter entered the Soldier Readiness Processing Center, where personnel are disarmed, armed with a laser sighted pistol and a Smith &amp; Wesson revolver. He killed 13 people before he was shot by a Civilian Police officer. </li><li>2/12/2010 – <a href="http://en.wikipedia.org/wiki/2010_University_of_Alabama_in_Huntsville_shooting">Amy Bishop</a> went on a shooting rampage in classroom at the University of Alabama in Huntsville, Alabama. She killed 3 people before the Dean of the University, Debra Moriarity pushed the her out of the room and blockaded the door. She was arrested later. </li><li>1/8/2011 – <a href="http://azstarnet.com/news/local/govt-and-politics/article_c4e24098-1504-5767-901e-6c832300b961.html">Jared Lee Loughner</a> is charged with the shooting in Tucson, Arizona that killed 6 people, including Chief U.S. District Court Judge John Roll. He was stopped when he was tackled by two civilians. </li><li>2/27/2012 – <a href="http://en.wikipedia.org/wiki/Chardon_High_School_shooting">T.J. Lane</a> entered Chardon High School in Chardon, Ohio with a handgun and started shooting. 3 students died. The shooter was chased out of the building by a teacher and apprehended by police later. </li><li>4/22/2012 – <a href="http://freedomoutpost.com/2012/07/the-aurora-shooting-you-didnt-hear-about-in-the-media/">Kiarron Parker </a>opened fire in a church parking lot in Aurora, Colorado. The shooter killed 1 person before being shot and killed by a member of the congregation who was carrying concealed. </li><li>7/20/2012 – <a href="http://silverunderground.com/2012/07/pop-friday-tragic-shooting-at-the-dark-knight-rises/">James Holmes</a> went into a crowded movie theater in Aurora, Colorado and opens fire with an AR-15 semi-automatic assault rifle. 12 people were killed, before the shooter surrendered to police. </li></ul><strong>Step Four: Final analysis</strong><br />With 14 incidents stopped by police with a total of 200 dead that’s an average of about 14.3. With 15 incidents stopped by civilians and 35 dead that’s an average of 2.3.<br />The first point I want to draw your attention to is that roughly half of shooting rampages end in suicide anyway. What that means is that police are not even in a position to stop most of them. Only the civilians present at the time of the shooting have any opportunity to stop those shooters. That’s probably more important than the statistic itself. In a shooting rampage, counting on the police to intervene at all is a coin flip at best.<br />Second, within the civilian category 10 of the 15 shootings were stopped by unarmed civilians. What’s amazing about that is that whether armed or not, when a civilian plays hero it seems to save a lot of lives. The courthouse shooting in Tyler, Texas was the only incident where the heroic civilian was killed. In that incident the hero was armed with a handgun and the villain was armed with an assault rifle and body armor. If you compare the average of people killed in shootings stopped by armed civilians and unarmed civilians you get 1.8 and 2.6, but that’s not nearly as significant as the difference between a proactive civilian, and a cowering civilian who waits for police.<br />So, given that far less people die in rampage shootings stopped by a proactive civilian, only civilians have any opportunity to stop rampage shootings in roughly half of incidents, and armed civilians do better on average than unarmed civilians, wouldn’t you want those heroic individuals who risk their lives to save others to have every tool available at their disposal?<br />Tags: <a href="http://dailyanarchist.com/tag/columbine/" rel="tag">Columbine</a>, <a href="http://dailyanarchist.com/tag/firearms/" rel="tag">firearms</a>, <a href="http://dailyanarchist.com/tag/fort-hood/" rel="tag">Fort Hood</a>, <a href="http://dailyanarchist.com/tag/james-holmes/" rel="tag">James Holmes</a>, <a href="http://dailyanarchist.com/tag/jared-lee-loughner/" rel="tag">Jared Lee Loughner</a>, <a href="http://dailyanarchist.com/tag/shooting-rampage/" rel="tag">shooting rampage</a>, <a href="http://dailyanarchist.com/tag/virginia-tech/" rel="tag">Virginia Tech</a></div></div>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-63123155027608857182012-07-16T11:01:00.002-07:002012-07-16T11:01:30.373-07:00From Jason HommelAt Freedom Fest this weekend in Las Vegas, Libertarian Carla Howell made the point that Romney would be far worse than Obama.&nbsp; This surprised me, but it took me only moments of listening&nbsp;to realize it is true.&nbsp; <br /><div _yuid="yui_3_1_1_3_1342451090662198">Carla Howell's reason&nbsp;is that Romney is a big government politician.&nbsp; Obamacare was based on Romneycare.&nbsp; If the nation elects Romney, national health care, at least a replaced Romneycare, will be a reality for 50 years, and debate will be OVER, because it will be continually pointed out by the liberal media and controlled press that "both parties" and "everyone" wants it, even though that will not be true.&nbsp; </div>I hope and pray that delegates will vote Ron Paul and nominate him as the Republican's choice for president.&nbsp; But that might not happen.<br />The only other choice, the ONLY CHOICE, if Ron Paul does not become the Republican nominee, is Libertarian candidate, Gary Johnson, who was the former governor of New Mexico, who vetoed over 700 bills while in office, more than all the rest of the nation's governors combined.&nbsp; When he ran for office, governor, for the first time, he spent $510,000 of his own money on his campaign, and received only $30,000 in donations at the last moment when it appeared as if he might win!&nbsp; Amazing!&nbsp; <br />The man is unbribable.&nbsp; He's like an angel, but maybe better.&nbsp; Bible says that a third of the angels fell.<br />I asked him if it was difficult to raise money, since nobody can bribe him with donations, since his principles are to libertarian truths, and not for sale.&nbsp; Not even Libertarians can "get something" from a man who would have the government spend nothing!<br />He admitted it was difficult to raise money, and related the story above of spending his own money to gain office, with a mere $30,000 in donations!<br />How fortunate for the nation at this time that we have TWO excellent Libertarians entering the national debate and race for the office of the presidency!<br />How much more successful will Gary Johnson be with actual campaign contributions, this time around!&nbsp; So, I'm proud to say that I just donated the maximum to his campaign, $2500.&nbsp; Consider.&nbsp; Ponder this next point:<br />Even if Gary Johnson does not win, he deserves your support, if you value freedom, if you value the future of your lives and children.<br />Even if Gary Johnson does not win, you have a chance to let your fellow Americans know that you refuse to vote for the lessor of two evils, and that you can support and encourage real freedom, and encourage other people to study and think about real libertarian ideals.<br />Voting is not a popularity contest.&nbsp; It is not a chance for you to "show off" and to try to pick who other people think might be the winner.&nbsp; <br />Voting is a chance for your own self-expression.&nbsp; Trying to vote for who you think the winner might be is beyond foolishness.<br />Voting is your chance to raise your voice for real meaningful change.&nbsp; The only way you can vote for real change is to vote for a man who will actually bring honest changes!<br />Even if "the libertarian" does not win, other politicians at all levels will take notice of how many people voted libertarian, and will be more likely to move their own views towards libertarian ideals of freedom.&nbsp; But only to the extent that people vote libertarian!<br />And as it stands, Romney is likely the worse of two evils, since it appears he is willing to not only embrace every single big government idea, but even worse, propose his own!<br />The way I look at it, I can only hope that the nation is not headed into violent chaos of hyperinflation and big government oppression and violent revolution if the nation votes for Romney.&nbsp; Or Obama.<br />As I see it, it's far more likely that the nation will discover a peaceful way towards freedom by supporting and voting for Gary Johnson.&nbsp; As I see it, lives depend on this.&nbsp; It is all the more important to vote for Gary Johnson if you live in a "blue" state like California who will likely vote for Obama anyway, because a vote for Romney would not only be harmful for the nation as described above, but a lost vote, as it would mean that you support the "status quo" of big government spending and continued erosion and oppression of our rights.&nbsp; <br />Only a vote for Gary Johnson can register your peaceful discontent with the state and direction of our nation.&nbsp; And if a vote counts, your early and immediate financial support means so much more.<br />But more important than political involvement, as a way to increase freedom in the US, is to buy silver!&nbsp; Buying silver is an act of voting "no confidence" in the current government.&nbsp; Buying silver reduces the oppressive power of the printing press of the Federal Reserve, which they use to bribe politicians, buy the media, bail out the banks, and buy votes.&nbsp; <br />I spoke with Gary Johnson's running mate, Judge Jim Gray, a bit about a certain difficulty I have in understanding the consequences of electing freedom minded politicians.&nbsp; I said, "Look at Ronald Reagan.&nbsp; He was a gold advocate, and advocate for liberty, and he did good things for increasing freedom by reducing tax rates from 76% down to 33%.&nbsp; Suppose that Gary Johnson manages to balance the budget and reduce government spending by 40%.&nbsp; I asked, "Wouldn't this save the dollar, and preserve big government's control over us all the more?"&nbsp; Yes, it might, but it's better than the alternative; potentially violent revolution through hyperinflation and big government crackdowns on freedom.&nbsp; I agree.<br />We silver and gold bugs are a curious lot.&nbsp; We are among the only ones who will actively work against the best interests of our own investments, for the good of the nation.&nbsp; We buy gold and silver, but generally support politicians that might make our purchases of gold and silver unnecessary!<br />So, ironically, more important than voting, there is another non-political alternative, and something else you can do, in addition to donating and voting.&nbsp; BUY SILVER!&nbsp; Buying silver exponentially reduces the power of government's printing press, which they use to steal the productive capacity of the nation, and use to pay the manpower for their oppressive government programs.<br />If Libertarians Johnson/Gray advocate buying silver on the campaign trail, they have the potential to reach so many more people.&nbsp; As it stands, the world wide physical silver investment market is only about $3 billion.&nbsp; The Libertarians usually garner 1% of the vote.&nbsp; But if they get 1% of the people to buy silver, well, 1% of money in the banks would be $180 billion.&nbsp; Imagine what that would do to the silver market!&nbsp;&nbsp; <br />Jim Gray got it.&nbsp; He understood.&nbsp; He wants to learn more. <br />People need to understand that it's not the government that needs to return to silver; the people must do it first.&nbsp; Government will never lead, it will only follow.&nbsp; It's up to the people to lead.<br />People get the government they deserve.&nbsp; <br />Expect big things for silver and the Gary Johnson campaign in the coming months.&nbsp; Donate early.&nbsp; Help out early.&nbsp; Volunteer.&nbsp; Blog.&nbsp; Facebook.&nbsp; The more you do, the sooner, the better.<br />Gary Johnson has not paid for this endorsement, it was the other way around.<br /><div _yuid="yui_3_1_1_3_1342451090662195">God bless.<br /></div>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-29263012869136722362012-07-12T13:33:00.001-07:002012-07-12T13:33:24.614-07:00Gun Control Restricts Those Least Likely to Commit Violent Crimes: Newsroom: The Independent Institute<a href="http://www.independent.org/newsroom/article.asp?id=2472#.T_80jcQqSMs.blogger">Gun Control Restricts Those Least Likely to Commit Violent Crimes: Newsroom: The Independent Institute</a>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-50392104644350057862012-07-12T12:08:00.005-07:002012-07-12T12:08:48.779-07:00US health care: A reality check on cross-country comparisons<div class="article-title">US health care: A reality check on cross-country comparisons</div><div class="article-title">&nbsp;</div><div class="article-title">&nbsp;</div><div class="policy-article-info" sizcache="65" sizset="5"><div class="article-info-left" sizcache="34" sizset="23"><div class="know-more-sub-article-publisher" sizcache="34" sizset="23"><a href="http://www.aei.org/scholar/he-frech/">H.E. Frech,</a> <a href="http://www.aei.org/scholar/stephen-t-parente/">Stephen T. Parente,</a> <a href="javascript:void();">John Hoff</a> </div><div class="know-more-sub-article-date">July 11, 2012 </div></div></div><div class="article-copy-holder" sizcache="58" sizset="35"><div class="policy-article-copy class" sizcache="58" sizset="38"><i>The United States spends substantially more on health care per capita than other developed countries. Based on comparison data of health status, the Organisation for Economic Co-operation and Development (OECD) published a report on health system performance, finding that the US system does not perform better than systems in countries that spend less. On many measures, US health status is inferior to those of other countries. We find these cross-country comparisons unable to adequately differentiate between health system performance and other confounding factors that determine health. In this Outlook, we provide a comprehensive critique of the OECD report and suggest several ways in which to strengthen the analysis. This includes improving the accuracy of infant mortality rates, employing life expectancy and premature mortality measures that are less sensitive to external factors, improving controls for external elements, and distinguishing between country-specific differences in health status and countries’ health care system efficiency. </i><br /><span class="subtitle">Key points in this <i>Outlook</i>:</span><br /><ul sizcache="58" sizset="38"><li>The United States spends substantially more per capita on health care than other developed countries, yet commonly cited reports indicate that the United States does not have superior health system performance. </li></ul><ul sizcache="58" sizset="39"><li>The Organisation for Economic Co-operation and Development (OECD) uses mortality metrics to measure health care system performance, but these data do not adequately indicate health status differences and do not accurately judge health care system efficiency. </li></ul><ul sizcache="58" sizset="40"><li>The OECD and other researchers must adjust their methods for measuring infant mortality, life expectancy, and premature mortality and control for confounding factors such as lifestyle to give a more accurate picture of health system performance. </li></ul><br /><span class="subtitle">Introduction </span><br />The United States spends substantially more on health care as a percentage of gross domestic product (GDP) than other developed countries. In 2010, US health care spending amounted to 17.9 percent of GDP, which worked out to $8402 per person.<span class="footnote">[1]</span> On the unadjusted measures customarily used to assess population health, US results are not better than those of countries that spend less, and on many of these measures, US outcomes are inferior.<br />This raises the question of whether the US health care system is inefficient. The primary source of comparison data on health outcomes is the Organisation for Economic Co-operation and Development’s (OECD) health system performance data and reports. This information is used to support broad criticisms of the US health care system and to compare it unfavorably with others, particularly the state-operated or state-controlled systems of Europe. Illustrations of such critiques include assessments by <i>Washington Post</i> columnist Richard Cohen and the Commonwealth Fund.<span class="footnote">[2]</span><br />Using these health comparison data, the OECD Economics Department issued a major report in 2008, henceforth referred to as “the OECD report.”<span class="footnote">[3</span><span class="footnote">]</span> More recently, the OECD issued an expansion of the report, which is primarily based on the same underlying empirical analysis and was written by some of the same authors as the earlier report.<span class="footnote">[4]</span><br /><div class="article-quote-right">"The combination of higher delivery costs because of greater NICU use and the unique way the United States counts live briths could lead one to erroneously conclude that the United States is highly inefficient compared to other industrialized nations."</div>This <i>Outlook </i>offers a brief critical assessment of international health system performance metrics. We will focus on three statistics that the OECD delves into in its report: infant mortality, life expectancy, and premature death. The strengths and weaknesses of these measures are illuminated through brief examples that ultimately demonstrate that the measures do not reflect the efficiency of any country’s health system. Given that organizations such as the OECD continually try to evaluate countries’ health systems, US policymakers and analysts must understand the limitations of such exercises. We conclude with suggested changes in approach and a road map for improved research.<br />Before describing the key metrics for international comparison, it is useful to recall the relatively recent origin of international health statistics. The OECD was created in 1948 as the Organisation for European Economic Co-operation (OEEC) to administer funds made available by the US Marshall Plan for the reconstruction of Europe after World War II. Later, the OEEC’s membership was extended beyond Europe. In 1961, it was reformed into the OECD. Today, its members are thirty-four developed countries.<span class="footnote">[5]</span><br />Over the last three decades, OECD has published a set of international health statistics based on data supplied by member countries. The data are collected and collated by the Health Division within the Directorate for Employment, Labor, and Social Affairs.<br /><span class="subtitle">Health Status Metrics</span><br />A common misconception is that people value health care in and of itself. In reality, people value the improved health status that they hope to gain from receiving health care. Indeed, using most health care is unpleasant. Health status is not directly measurable; it can only be approximated through related factors that can be measured.<br />The OECD report focused on observable measures as proxies of health status to provide comparative statistics. A depressing reality is that these observable measures are all some derivative of mortality. The OECD expects all its member states to provide death registers as part of a planned, one-hundred-year public health mission to identify sources of death and time of death to track epidemiological emergencies such as those resulting from infectious diseases. In the service of OECD, mortality metrics are outcome measures that are meant to proxy health status and the output of health care systems, rather than the consumption of health services.<br />The OECD uses infant mortality, life expectancy, and premature death as measures of mortality in their report.<span class="footnote">[6]</span> The validity of each one of these measures as proxies for health system performance is examined below.<br /><b>Infant Mortality.</b> There are three overlapping OECD infant mortality measures: infant, neonatal, and perinatal mortality.<span class="footnote">[7]</span> Infant mortality is the number of deaths in the first year per one thousand live births. Neonatal mortality is the number of deaths in the first twenty-eight days per one thousand live births. Perinatal mortality is the number of deaths in the first week after birth, plus fetal deaths after twenty-eight weeks of gestation or fetuses that exceed a weight of one thousand grams.<br />Partly based on an argument by Nixon and Ullmann, the OECD report states that these infant mortality measures are less influenced by factors unrelated to the health care system than are other possible measures.<span class="footnote">[8]</span> However, we believe that the opposite is true. One major concern is that the basic definitions of infant mortality are not consistent across countries.<br />For example, babies who are not viable and who die quickly after birth are more likely to be classified as stillbirths in countries outside the United States, especially in Japan, Sweden, Norway, Ireland, the Netherlands, and France. This is especially likely for babies who die before their birth is legally registered.<span class="footnote">[9]</span> In the United States, however, nonviable births are often recorded as live births, making the US infant mortality rate appear misleadingly high. In a detailed study of medical records and birth and death certificates in Philadelphia, Gibson and colleagues found that infant mortality had been overstated by 40 percent, merely as a result of these nonviable births that were recorded as live births.<span class="footnote">[10] </span><br />There is another problem with using infant mortality to represent health care efficacy. US physicians often go to great efforts—at the prenatal and postnatal stages—to save a baby with poor survival chances. The additional prenatal care an American doctor provides may improve the odds of the live birth of a baby with poor survival chances, who is then likely to require extensive neonatal care. Accordingly, the US uses substantially more neonatal intensive care units (NICU) than other industrialized countries. In this case, the additional health care may actually worsen reported infant mortality rates and misleadingly suggest poor care in the United States. Similarly, US physicians are more likely to resuscitate very small premature babies, many of whom nevertheless die and many others of whom live with serious and expensive medical problems. This practice also raises measured infant mortality rates for the United States.<br />The combination of higher delivery costs because of greater NICU use and the unique way the United States counts live births could lead one to erroneously conclude that the United States is highly inefficient compared to other industrialized nations. Furthermore, infant mortality is strongly and immediately affected by external influences such as the mother’s age, behavior, and lifestyle (meaning factors such as obesity and use of tobacco, alcohol, and illicit drugs).<span class="footnote">[11]</span> Infant mortality is strongly linked to birth weight and gestational age, which are highly, but not perfectly, correlated. Indeed, the correlation is high enough that researchers will often use one or the other measure according to conveniences. In any case, both measures are largely a result of parental lifestyles.<br />Teenage mothers are more likely to have preterm, low-birth-weight babies. The mortality rate for infants born to US teenage mothers is 1.5 to 3.5 times as high as the rate for infants born to mothers ages twenty-five to twenty-nine.<span class="footnote">[12] </span>The US rate of births for teenage mothers is very high—2.8 times that of Canada and 7.0 times that of Sweden and Japan. If the United States had the same birth weights as Canada, its infant mortality rate—adjusting for this variable alone—would be slightly lower than Canada’s (5.4 versus 5.5 per one thousand births).<span class="footnote">[13] </span><br />Turning to gestational age, MacDorman and&nbsp; Mathews calculate that if the United States had the same distribution of gestational ages as Sweden, its recorded infant mortality rate would drop by 33 percent,&nbsp; tying it with France as the fifth lowest rate out of twenty-one developed countries.<span class="footnote">[14]</span> Moreover, in the United States, mortality rates for infants born to unwed mothers were about twice as high as for infants born to married women.<span class="footnote">[15]</span><br />Overall, these lifestyle and socioeconomic factors may reflect poorly on some aspects of society in the United States in comparison to other countries. It is inappropriate, however, to conclude that the root cause is the US health care system rather than societal factors in a dynamic heterogeneous society. Infant mortality is a particularly misleading metric by which to grade country-specific health system performance and to make international comparisons.<br /><div class="article-quote-right">"A further limitation of using potential years of life lost as a mortality measurement is that many deaths are caused by other external factors--such as obesity and pollution--which are disguised by the disease they cause."</div><b>Life Expectancy.</b> In the abstract, life expectancy (LE) could be an effective metric for comparing international health systems. But there are problems with this measure. One important flaw is that it incorporates infant mortality, which, as discussed above, is confounded by external factors and is not identically measured across all countries covered in the OECD report.<br />Our main concern is the dependency of LE upon which benchmark age is used. For example, LE can be measured at birth or at older ages such as at the age of forty, sixty, or sixty-five. The OECD uses LE at birth. But LE at older ages is less affected by the measurement, lifestyle, and cultural problems inherent in infant mortality and in LE at birth. Measurement errors and definitional differences related to infant mortality do not directly affect LE at later ages.<br />Thus, the measurement errors and lifestyle and cultural influences that affect the infant mortality measure are directly imported into LE calculations. In a comparative study of the United States, the United Kingdom, and Germany, Martin Neil Baily and Alan Garber conclude:<br /><div style="padding-left: 30px;">Neonatal mortality is heavily influenced by social and economic factors, along with individual health behaviors, that are not strongly related to health care delivery. Overall life expectancy at birth, then, may be an unsuitable measure of health outcomes for the purpose of measuring productivity of health services.<span class="footnote">[16]</span></div>As a result of the problems with infant mortality (as well as mortality due to violence and accidents), the difference between US life expectancy and that of other countries is reduced at later ages. This is demonstrated in empirical studies of the production of health, including in the OECD report itself and also in the raw data. For example, in 2000, female life expectancy at birth was 79.3 years in the United States, 80.3 in the United Kingdom and 81.2 in Germany. Female life expectancy at sixty-five was 19.0 years in the United States, 19.0 years in the United Kingdom and 19.6 years in Germany.<span class="footnote">[17]</span> The differences decline from 1.0 and 1.9 to 0.0 and 0.6.<br /><b>Premature Mortality.</b> Premature mortality, which is determined by potential years of life lost (PYLL), is a useful measure if appropriately calculated, though it is also strongly influenced by infant mortality. One advantage—stressed by the OECD—is that PYLL can be linked to cause of death.<span class="footnote">[18]</span> Since PYLL is calculated from deaths that occur before the defined full life (seventy years in the OECD report), one can include or exclude deaths based on their specific causes. This allows the analyst to reduce, but not eliminate, the confounding of some external causes with health care inputs and with country-specific effects. Oddly, the OECD does not use PYLL measurements for cross-country comparisons.<br />One can calculate PYLL numbers for categories of diseases that are more related to health care and analyze the effect of the health care system and other variables on PYLL by those categories. Miller and Frech have done this for the respiratory, circulatory, and cancer categories and Or, Wang, and Jamison have done the same for heart disease.<span class="footnote">[19]</span><br />With this in mind, the OECD states that adjustments to PYLL numbers were made in one area, namely to exclude transport accidents, accidental falls, assaults, and suicides. However, while the OECD performs some analyses with these PYLL number adjustments, it does not do so for the country-specific analyses.<br />Though helpful, moreover, adjustments of PYLL numbers are not perfect. Accident and assault victims use health care resources, especially if they do not die quickly. But the costs associated with this care cannot be accounted for.<br />A further limitation of using&nbsp; PYLL as a mortality measurement is that many deaths are caused by other external factors—such as obesity and pollution—which are disguised by the disease they cause (respectively, circulatory and respiratory disease). PYLL cannot be adjusted to reflect these factors; the mediating disease, not the underlying external cause, will be recorded as the cause of death.<br />In the OECD report, the maximum age at which to establish PYLL is seventy. Thus, the costs and success (or lack of success) of a health care system in extending life and the quality of life beyond age seventy are not reflected. The authors of the report recognize that this is a weakness of this measure.<span class="footnote">[20]</span> The costs of this care for consumers ages seventy years or more are reflected in the OECD expenditure data, but the health outcomes are not reflected in the PYLL measure.<br /><span class="subtitle">Accounting for Quality of Life</span><br />Mortality data are an inadequate proxy for health system performance for another reason: they measure years of life, but do not reflect the quality of that life. Mortality measures need to be adjusted to give a better picture of health status. The common terms for these adjusted measures are quality-adjusted LE (QALE), disability-adjusted LE (DALE), and health-adjusted LE (HALE).<span class="footnote">[21]</span> These adjustments depend on the values of the individual consumers and thus differ person by person. In practice, surveys of consumers or experts (typically panels of physicians) are used to find average weights to be applied in research.<span class="footnote">[22]</span> In some surveys, for instance, a year spent with a migraine headache is considered to be an indicator of very low quality of life and is counted as equivalent to only a month of healthy time; the year with the migraine would be weighted at one-twelfth, or 0.083 of a healthy year.<br />The OECD report, however, treats all years of life as the same, regardless of health status. HALE is discussed, but not used. The OECD report sticks with raw LE—rather than using quality-adjusted versions—because of the wider availability of unadjusted LE data, but at the expense of conceptual accuracy. As a result, the OECD report attributes no value to expenditures that permit people to enjoy a better life by, for example, being able to work or to be functional longer; it correlates expenditures only with mortality. Thus, money spent on knee replacements, for instance, would appear to be inefficient in that it does not decrease mortality, despite the obvious advantages of improved mobility and prevention of falls. Therefore, it is difficult to see mortality alone as an accurate measure of health system efficiency.<br /><div class="subtitle">A Road Map for Improvement</div>We propose some improvements for future research of this kind, beginning with infant mortality. Infant mortality seems to be the least accurate measure of health status because it is most heavily influenced by factors external to the health care system. However, many of those external factors could be addressed by controlling for birth weight and gestational age. Keeping birth weight and gestational age constant would eliminate some of the confounding effects of lifestyle and other influences. The result of doing so is dramatic, as we have seen. One could form an index by picking a distribution of weights to multiply by the birth-weight-specific infant mortality rates.<br />LE at birth and PYLL numbers are at risk of being seriously flawed because of infant mortality miscalculations. Considering a version of PYLL that excludes most of the causes of death that affect infants would decrease this risk.<br />One can somewhat reduce the problem of confounding variables by focusing on LE at later ages. As discussed (and contrary to the assertions of the OECD report), infant mortality is highly influenced by external factors and by definitional and measurement problems. LE at later ages—such as at forty, sixty, or sixty-five—eliminates the people who have died before the selected ages. Furthermore, many of the lifestyle choices that lead to bad health outcomes are more heavily concentrated among younger consumers and affect LE more at younger ages. For example, in 2003-2005, annual US motor vehicle deaths peaked at 33 per 100,000 people at age seventeen. This peak was a maximum statistic that was not reached at any subsequent age.<br />Similarly, the all-injury death rate has an early peak at age eighteen. After that, the all-injury death rate does not catch up to that level until age seventy-five.<span class="footnote">[</span><span class="footnote">23]</span> Using LE at birth fails to adjust for these factors and incorrectly lowers the apparent efficiency of the US health care system.<br />Accidental and violent deaths need to be excluded from PYLL measurements in making country-level comparisons. The OECD pursues this to some extent by excluding certain accidental and violent deaths from their measurements. But since the PYLL results for country-level efficiency are not reported, the result of adjusting for these causes of death is not reflected. The country-level analysis is entirely in terms of LE and infant mortality, which have questionable validity.<span class="footnote">[24] </span><br /><div class="article-quote-right">"It is overreaching to interpret country-specific variation in health outcomes as a measure of health care system productivity."</div>Finally, since morbidity is so important, it would also be relevant to use a measure of quality-adjusted or disability-adjusted LE. This change would be a major contribution to the cross-country health status comparisons.<br /><div class="subtitle">Conclusion</div>The OECD report raises important questions on how to determine the efficiency of health care in producing positive health outcomes and how to compare and contrast efficiency of systems among different countries. The OECD staff concludes that health care is highly productive in improving health outcomes and that efficiency varies greatly across countries. It provides country-specific estimates of that efficiency.<br />Unfortunately, major problems in OECD’s analysis render their conclusions—especially the country-specific conclusions—unreliable. Many external factors that influence health outcomes are either omitted or poorly measured. The net effect is to underweight the role that non-health care factors play in determining health. And since the United States scores relatively poorly on most of these external measures, omitting them or not adequately controlling for them increases the apparent relative inefficiency of the US health care system and probably biases the estimated productivity of health care as well. The OECD report controls to a limited extent for some lifestyle differences by gross measures (for example, consumption of alcohol, tobacco, fruits, and vegetables). It adjusts one health measure—PYLL—for violence and accidents, but does not use that measure for country-specific efficiency numbers. As explained above, we believe that these controls and adjustments are inadequate.<br />It is overreaching to interpret country-specific variation in health outcomes as a measure of health care system productivity. In reality, the country-specific estimates reflect all differences in country-level influences, whatever their source and measurement issues. As econometrician William Greene stated in a similar context, there are considerable differences among countries that masquerade as inefficiency. More carefully calibrated research is necessary to identify these differences.<span class="footnote">[25]</span><br /><i>H.E. Frech III (frech@econ.uscb.edu) is an adjunct scholar at AEI and a professor in the Department of Economics at the University of California, Santa Barbara; Stephen T. Parente (stephen.parente@gmail.com) is an adjunct scholar at AEI and a professor in the Department of Finance at the Carlson School of Management at the University of Minnesota; and John S. Hoff (johnseaburyhoff@yahoo.com) is a visiting scholar at AEI and was health attaché to the US mission to the Organisation for Economic Co-operation and Development, 2005-2009.</i></div></div>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-44653038617057891812012-06-21T06:44:00.001-07:002012-06-21T06:44:32.364-07:00The 30-Day Reading List That Will Lead You to Becoming a Knowledgeable Libertarian by Robert Wenzel<a href="http://lewrockwell.com/wenzel/wenzel184.html">The 30-Day Reading List That Will Lead You to Becoming a Knowledgeable&nbsp;Libertarian by Robert Wenzel</a>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-75850569364314521632012-06-19T08:04:00.001-07:002012-06-19T08:04:37.103-07:00The Fascist Threat - Llewellyn H. Rockwell Jr. - Mises Daily<a href="http://mises.org/daily/5752/The-Fascist-Threat#.T-CU67NDSAU.blogger">The Fascist Threat - Llewellyn H. Rockwell Jr. - Mises Daily</a>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-14755427205908068312012-04-17T09:39:00.002-07:002012-04-17T09:39:57.887-07:00<div class="editorial-preface"><h1>The Libertarian Manifesto on Pollution </h1><div class="meta"><strong>Mises Daily:</strong> Tuesday, April 17, 2012 by <a href="http://mises.org/daily/author/299/Murray-N-Rothbard" rel="author">Murray N. Rothbard</a></div><br /><br />[<i><a href="http://mises.org/document/1010/For-a-New-Liberty-The-Libertarian-Manifesto">For a New Liberty: The Libertarian Manifesto</a></i> (1973)]</div><div class="figure"><img alt="" border="0" src="http://images.mises.org/5978/Pollution.jpg" /></div>All right: Even if we concede that full private property in resources and the free market will conserve and create resources, and do it far better than government regulation, what of the problem of pollution? Wouldn't we be suffering aggravated pollution from unchecked "capitalist greed"?<br />There is, first of all, this stark empirical fact: Government ownership, even socialism, has proved to be no solution to the problem of pollution. Even the most starry-eyed proponents of government planning concede that the poisoning of Lake Baikal in the Soviet Union is a monument to heedless industrial pollution of a valuable natural resource. But there is far more to the problem than that. Note, for example, the two crucial areas in which pollution has become an important problem: the air and the waterways, particularly the rivers. But these are precisely two of the vital areas in society in which private property has not been permitted to function.<br />First, the rivers. The rivers, and the oceans too, are generally owned by the government; private property, certainly complete private property, has not been permitted in the water. In essence, then, government owns the rivers. But government ownership is not true ownership, because the government officials, while able to control the resource cannot themselves reap their capital value on the market. Government officials cannot sell the rivers or sell stock in them. Hence, they have no economic incentive to preserve the purity and value of the rivers. Rivers are, then, in the economic sense, "unowned"; therefore government officials have permitted their corruption and pollution. Anyone has been able to dump polluting garbage and wastes in the waters. But consider what would happen if private firms were able to own the rivers and the lakes. If a private firm owned Lake Erie, for example, then anyone dumping garbage in the lake would be promptly sued in the courts for their aggression against private property and would be forced by the courts to pay damages and to cease and desist from any further aggression. Thus, only private property rights will insure an end to pollution — invasion of resources. Only because the rivers are unowned is there no owner to rise up and defend his precious resource from attack. If, in contrast, anyone should dump garbage or pollutants into a lake which is privately owned (as are many smaller lakes), he would not be permitted to do so for very long — the owner would come roaring to its defense.<a class="noteref" href="http://mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution#note1" name="ref1">[1]</a> Professor Dolan writes:<br /><blockquote><small>With a General Motors owning the Mississippi River, you can be sure that stiff effluent charges would be assessed on industries and municipalities along its banks, and that the water would be kept clean enough to maximize revenues from leases granted to firms seeking rights to drinking water, recreation, and commercial fishing.<a class="noteref" href="http://mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution#note2" name="ref2">[2]</a></small></blockquote>If government as owner has allowed the pollution of the rivers, government has also been the single major active polluter, especially in its role as municipal sewage disposer. There already exist low-cost chemical toilets which can burn off sewage without polluting air, ground, or water; but who will invest in chemical toilets when local governments will dispose of sewage free to their customers?<br />This example points up a problem similar to the case of the stunting of aquaculture technology by the absence of private property: if governments as owners of the rivers permit pollution of water, then industrial technology will — and has — become a water-polluting technology. If production processes are allowed to pollute the rivers unchecked by their owners, then that is the sort of production technology we will have.<br />If the problem of water pollution can be cured by private property rights in water, how about air pollution? How can libertarians possibly come up with a solution for this grievous problem? Surely, there can't be private property in the <i>air</i>? But the answer is: yes, there can. We have already seen how radio and TV frequencies can be privately owned. So could channels for airlines. Commercial airline routes, for example, could be privately owned; there is no need for a Civil Aeronautics Board to parcel out — and restrict — routes between various cities. But in the case of air pollution we are dealing not so much with private property <i>in the air</i> as with protecting private property in one's lungs, fields, and orchards. The vital fact about air pollution is that the polluter sends unwanted and unbidden pollutants — from smoke to nuclear radiation to sulfur oxides — <i>through</i> the air and into the lungs of innocent victims, as well as onto their material property. All such emanations which injure person or property constitute aggression against the private property of the victims. Air pollution, after all, is just as much aggression as committing arson against another's property or injuring him physically. Air pollution that injures others is aggression pure and simple. The major function of government — of courts and police — is to stop aggression; instead, the government has failed in this task and has failed grievously to exercise its defense function against air pollution.<br />It is important to realize that this failure has <i>not</i> been a question purely of ignorance, a simple time lag between recognizing a new technological problem and facing up to it. For if some of the modern pollutants have only recently become known, factory smoke and many of its bad effects have been known ever since the Industrial Revolution, known to the extent that the American courts, during the late — and as far back as the early 19th century made the deliberate decision to allow property rights to be violated by industrial smoke. To do so, the courts had to — and did — systematically change and weaken the defenses of property right embedded in Anglo-Saxon common law. Before the mid and late 19th century, any injurious air pollution was considered a tort, a nuisance against which the victim could sue for damages and against which he could take out an injunction to cease and desist from any further invasion of his property rights. But during the 19th century, the courts systematically altered the law of negligence and the law of nuisance to <i>permit</i> any air pollution which was not unusually greater than any similar manufacturing firm, one that was not more extensive than the customary practice of fellow polluters.<br />As factories began to arise and emit smoke, blighting the orchards of neighboring farmers, the farmers would take the manufacturers to court, asking for damages and injunctions against further invasion of their property. But the judges said, in effect, "Sorry. We know that industrial smoke (i.e., air pollution) invades and interferes with your property rights. But there is something <i>more important</i> than mere property rights: and that is public policy, the 'common good.' And the common good decrees that industry is a good thing, industrial progress is a good thing, and therefore your mere private property rights must be overridden on behalf of the general welfare." And now all of us are paying the bitter price for this overriding of private property, in the form of lung disease and countless other ailments. And all for the "common good"!<a class="noteref" href="http://mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution#note3" name="ref3">[3]</a><br />That this principle has guided the courts during the air age as well may be seen by a decision of the Ohio courts in <i>Antonik v. Chamberlain</i> (1947). The residents of a suburban area near Akron sued to enjoin the defendants from operating a privately owned airport. The grounds were invasion of property rights through excessive noise. Refusing the injunction, the court declared:<br /><blockquote><small>In our business of judging in this case, while sitting as a court of equity, we must not only weigh the conflict of interests between the airport owner and the nearby landowners, but we must further recognize the public policy of the generation in which we live. We must recognize that the establishment of an airport … is of great concern to the public, and if such an airport is abated, or its establishment prevented, the consequences will be not only a serious injury to the owner of the port property but may be a serious loss of a valuable asset to the entire community.<a class="noteref" href="http://mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution#note4" name="ref4">[4]</a></small></blockquote>To cap the crimes of the judges, legislatures, federal and state, moved in to cement the aggression by prohibiting victims of air pollution from engaging in "class action" suits against polluters. Obviously, if a factory pollutes the atmosphere of a city where there are tens of thousands of victims, it is impractical for each victim to sue to collect his particular damages from the polluter (although an <i>injunction</i> could be used effectively by one small victim). The common law, therefore, recognizes the validity of "class action" suits, in which one or a few victims can sue the aggressor not only on their own behalf, but on behalf of the entire <i>class</i> of similar victims. But the legislatures systematically outlawed such class action suits in pollution cases. For this reason, a victim may successfully sue a polluter who injures him individually, in a one-to-one "private nuisance" suit. But he is prohibited by law from acting against a mass polluter who is injuring a large number of people in a given area! As Frank Bubb writes, "It is as if the government were to tell you that it will (attempt to) protect you from a thief who steals only from you, but it will not protect you if the thief also steals from everyone else in the neighborhood."<a class="noteref" href="http://mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution#note5" name="ref5">[5]</a><br /><i>Noise</i>, too, is a form of air pollution. Noise is the creation of sound waves which go through the air and then bombard and invade the property and persons of others. Only recently have physicians begun to investigate the damaging effects of noise on the human physiology. Again, a libertarian legal system would permit damage and class action suits and injunctions against excessive and damaging noise: against "noise pollution."<br />The remedy against air pollution is therefore crystal clear, and it has nothing to do with multibillion-dollar palliative government programs at the expense of the taxpayers which do not even meet the real issue. The remedy is simply for the courts to return to their function of defending person and property rights against invasion, and therefore to enjoin anyone from injecting pollutants into the air. But what of the propollution defenders of industrial progress? And what of the increased costs that would have to be borne by the consumer? And what of our present polluting technology?<br />The argument that such an injunctive prohibition against pollution would add to the costs of industrial production is as reprehensible as the pre-Civil War argument that the abolition of slavery would add to the costs of growing cotton, and that therefore abolition, however morally correct, was "impractical." For this means that the polluters are able to impose all of the high costs of pollution upon those whose lungs and property rights they have been allowed to invade with impunity.<br />Furthermore, the cost and technology argument overlooks the vital fact that if air pollution is allowed to proceed with impunity, there continues to be no economic incentive to develop a technology that will <i>not</i> pollute. On the contrary, the incentive would continue to cut, as it has for a century, precisely the other way. Suppose, for example, that in the days when automobiles and trucks were first being used, the courts had ruled as follows:<br /><blockquote><small>Ordinarily, we would be opposed to trucks invading people's lawns as an invasion of private property, and we would insist that trucks confine themselves to the roads, regardless of traffic congestion. But trucks are vitally important to the public welfare, and therefore we decree that trucks should be allowed to cross any lawns they wish provided they believe that this would ease their traffic problems.</small></blockquote>If the courts had ruled in this way, then we would now have a transportation system in which lawns would be systematically desecrated by trucks. And any attempt to stop this would be decried in the name of modern transportation needs! The point is that this is precisely the way that the courts ruled on air pollution — pollution which is far more damaging to all of us than trampling on lawns. In this way, the government gave the green light, from the very start, to a polluting technology. It is no wonder then that this is precisely the kind of technology we have. The only remedy is to force the polluting invaders to stop their invasion, and thereby to redirect technology into nonpolluting or even antipolluting channels.<br />Already, even at our necessarily primitive stage in antipollution technology, techniques have been developed to combat air and noise pollution. Mufflers can be installed on noisy machines that emit sound waves precisely contra-cyclical to the waves of the machines, and thereby can cancel out these racking sounds. Air wastes can even now be recaptured as they leave the chimney and be recycled to yield products useful to industry. Thus, sulfur dioxide, a major noxious air pollutant, can be captured and recycled to produce economically valuable sulfuric acid.<a class="noteref" href="http://mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution#note6" name="ref6">[6]</a> The highly polluting spark ignition engine will either have to be "cured" by new devices or replaced altogether by such nonpolluting engines as diesel, gas turbine, or steam, or by an electric car. And, as libertarian systems engineer Robert Poole, Jr., points out, the costs of installing the non- or antipolluting technology would then "ultimately be borne by the consumers of the firms' products, i.e., by those who <i>choose</i> to associate with the firm, rather than being passed on to innocent third parties in the form of pollution (or as taxes)."<a class="noteref" href="http://mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution#note7" name="ref7">[7]</a><br />Robert Poole cogently defines pollution "as the transfer of harmful matter or energy to the person or property of another, without the latter's consent."<a class="noteref" href="http://mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution#note8" name="ref8">[8]</a> The libertarian — and the only complete — solution to the problem of air pollution is to use the courts and the legal structure to combat and prevent such invasion. There are recent signs that the legal system is beginning to change in this direction: new judicial decisions and repeal of laws disallowing class action suits. But this is only a beginning.<a class="noteref" href="http://mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution#note9" name="ref9">[9]</a><br />Among conservatives — in contrast to libertarians — there are two ultimately similar responses to the problem of air pollution. One response, by Ayn Rand and Robert Moses among others, is to deny that the problem exists, and to attribute the entire agitation to leftists who want to destroy capitalism and technology on behalf of a tribal form of socialism. While part of this charge may be correct, denial of the very existence of the problem is to deny science itself and to give a vital hostage to the leftist charge that defenders of capitalism "place property rights above human rights." Moreover, a defense of air pollution does not even defend property rights; on the contrary, it puts these conservatives' stamp of approval on those industrialists who are trampling upon the property rights of the mass of the citizenry.<br />A second, and more sophisticated, conservative response is by such free-market economists as Milton Friedman. The Friedmanites concede the existence of air pollution but propose to meet it, <i>not</i> by a defense of property rights, but rather by a supposedly utilitarian "cost-benefit" calculation by government, which will then make and enforce a "social decision" on <i>how much</i> pollution to allow. This decision would then be enforced either by licensing a given amount of pollution (the granting of "pollution rights"), by a graded scale of taxes against it, or by the taxpayers paying firms <i>not</i> to pollute. Not only would these proposals grant an enormous amount of bureaucratic power to government in the name of safeguarding the "free market"; they would continue to override property rights in the name of a collective decision enforced by the State. This is far from any genuine "free market," and reveals that, as in many other economic areas, it is impossible to <i>really</i> defend freedom and the free market without insisting on defending the rights of private property. Friedman's grotesque dictum that those urban inhabitants who don't wish to contract emphysema should move to the country is starkly reminiscent of Marie Antoinette's famous "Let them eat cake" — and reveals a lack of sensitivity to human or property rights. Friedman's statement, in fact, is of a piece with the typically conservative, "If you don't like it here, leave," a statement that implies that the government rightly owns the entire land area of "here," and that anyone who objects to its rule must therefore leave the area. Robert Poole's libertarian critique of the Friedmanite proposals offers a refreshing contrast:<br /><blockquote><small>Unfortunately, it is an example of the most serious failing of the conservative economists: nowhere in the proposal is there any mention of <i>rights</i>. This is the same failing that has undercut advocates of capitalism for 200 years. Even today, the term "laissez-faire" is apt to bring forth images of eighteenth century English factory towns engulfed in smoke and grimy with soot. The early capitalists agreed with the courts that smoke and soot were the "price" that must be paid for the benefits of industry.… Yet laissez-faire without rights is a contradiction in terms; the laissez-faire position is based on and derived from man's rights, and can endure only when rights are held inviolable. Now, in an age of increasing awareness of the environment, this old contradiction is coming back to haunt capitalism.</small><br /><small>It is <i>true</i> that air is a scarce resource [as the Friedmanites say], but one must then ask <i>why</i> it is scarce. If it is scarce because of a systematic violation of rights, then the solution is not to raise the price of the status quo, thereby sanctioning the rights-violations, but to assert the rights and demand that they be protected.… When a factory discharges a great quantity of sulfur dioxide molecules that enter someone's lungs and cause pulmonary edema, the factory owners have aggressed against him as much as if they had broken his leg. The point must be emphasized because it is vital to the libertarian laissez-faire position. A laissez-faire polluter is a contradiction in terms and must be identified as such. A libertarian society would be a <i>full-liability</i> society, where everyone is fully responsible for his actions and any harmful consequences they might cause.<a class="noteref" href="http://mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution#note10" name="ref10">[10]</a></small></blockquote><div class="book-ad" id="10498-ad"><div class="book-img"><a href="http://mises.org/store/Product.aspx?ProductId=10498" title="Hazlitt, Henry"><img alt="Hazlitt, Henry" border="0" src="http://mises.org/store/Assets/ProductImages/EBOKSS400.jpg" /></a> </div><div class="book-price"><a href="http://mises.org/store/Product.aspx?ProductId=10498"><span class="line-through">$8.00</span> $5.00</a></div></div>In addition to betraying its presumed function of defending private property, government has contributed to air pollution in a more positive sense. It was not so long ago that the Department of Agriculture conducted mass sprayings of DDT by helicopter over large areas, overriding the wishes of individual objecting farmers. It <i>still</i> continues to pour tons of poisonous and carcinogenic insecticides all over the South in an expensive and vain attempt to eradicate the fire ant.<a class="noteref" href="http://mises.org/daily/5978/The-Libertarian-Manifesto-on-Pollution#note11" name="ref11">[11]</a> And the Atomic Energy Commission has poured radioactive wastes into the air and into the ground by means of its nuclear power plants, and through atomic testing. Municipal power and water plants, and the plants of licensed monopoly utility companies, mightily pollute the atmosphere. One of the major tasks of the State in this area is therefore to stop its <i>own</i> poisoning of the atmosphere.<br />Thus, when we peel away the confusions and the unsound philosophy of the modern ecologists, we find an important bedrock case against the existing system; but the case turns out to be not against capitalism, private property, growth, or technology per se. It is a case against the failure of government to allow and to defend the rights of private property against invasion. If property rights were to be defended fully, against private and governmental invasion alike, we would find here, as in other areas of our economy and society, that private enterprise and modern technology would come to mankind not as a curse but as its salvation.Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-5657339207160640562012-04-06T11:22:00.001-07:002012-04-06T11:22:20.304-07:00<h2><a href="http://reason.com/blog/2012/04/06/gop-social-darwinism-quantified-spend-50">GOP "Social Darwinism" Quantified! Spend 50 Percent More than Clinton, Pennies Less Than Obama!</a></h2><div class="byline"><span><a href="http://reason.com/people/nick-gillespie" rel="author">Nick Gillespie</a> | April 6, 2012</span></div><div class="entry p402_premium"><img alt="" class="pic right" height="328px" src="http://media.reason.com/mc/_external/2012_04/9ddabbffd6cd54eb7a6a995998f52196.gif?h=328&amp;w=475" width="475px" />Over at Investors Business Daily, the essential John Merline puts the Paul Ryan/GOP budget plan - the one being castigated as the second coming of Herod's babykilling hit squad and worse by spendthrift critics - into the awful perspective it deserves.<br />When expressed in terms of percentage of GDP (far right), Ryan's plan is higher than historical averages when it comes both to outlays and revenues. When stacked up against Bill Clinton's 2000 budget using constant 2005 dollars, Ryan's plan pulls in the same amount of money while spending 50 percent more.<br />If that's what passes for "<a href="http://reason.com/blog/2012/04/05/obamas-social-darwinism-nonsense" shape="rect">thinly veiled social Darwinism</a>" - President Obama's phrase - the English language is as broke as the federal treasury.<br />To put the dime's worth of difference between the Ryan plan and Obama's for spending over the next decade, take a look at this chart by <a href="http://reason.com/people/veronique-de-rugy/all" shape="rect">Reason columnist</a> and <a href="http://mercatus.org/" shape="rect">Mercatus Center economist</a> Veronique de Rugy.<br />Total projected spending for 10 years under the Ryan/House GOP plan runs to $40 trillion. Under Obama's framework, it comes to $45 trillion. <a href="http://mercatus.org/sites/default/files/publication/Projected-spending-ryan-obama-analysis-pdf.pdf" shape="rect">The only real difference between the two is that Ryan zeroes out spending on The Affordable Care Act</a>.<br />Under the Congressional Budget Office's "alternative scenario," which is based on likely renewal of certain policies, historical spending patterns, and a passing engagement with reality that is largely missing from legislative and executive branch budget plans, we'll spend $47 trillion over the next 10 years.<br /><img alt="" class="pic" height="308px" src="http://media.reason.com/mc/ngillespie/2012_04/ryan-obamaspending.jpg?h=308&amp;w=500" title="Social Darwinism Revealed!" width="500px" /></div>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-53420832979923871112012-04-06T09:20:00.002-07:002012-04-06T09:20:46.689-07:00<h1>Wall Street Math </h1><div class="meta"><strong>Mises Daily:</strong> Friday, April 06, 2012 by <a href="http://mises.org/daily/author/627/Doug-French" rel="author">Doug French</a> </div><br /><br />There's plenty of blame for the financial crisis being spread around. Those on the left say Wall Street wasn't regulated enough, while those on the right claim government mandates required lenders to make bad loans. The argument is made that the Federal Reserve was too loose, while the other side says Bernanke wasn't loose enough. Some blame greed. Others blame Wall Street's investment products. And then there's mathematics.<br />Wall Street has become a numbers game played at high speed by powerful computers trading complex derivatives utilizing even more complex mathematical modeling. Writing for the <i><a href="http://www.huffingtonpost.co.uk/theo-le-bret/are-mathematics-responsib_b_1362937.html">Huffington Post</a></i>, Théo Le Bret asks the reader to<br /><blockquote>Take the Black-Scholes equation, used to estimate the value of a derivative: it is actually no more than a partial differential equation of the financial derivative's value, as a function of four variables, including time and "volatility" of the underlying asset (the derivative being a 'bet' on the future value of the asset). Differential equations are well-known to physicists, since such fundamental properties of nature as the wave equation or Schrodinger's equation for quantum mechanics are given in the form of differential equations, and in physics their solutions seem to be very reliable: so why is this not always the case in finance?</blockquote>Mr. Le Bret quotes Albert Einstein for his answer: "as far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality."<br />Murray Rothbard <a href="http://mises.org/daily/3638/A-Note-On-Mathematical-Economics">put it</a> another way:<br /><blockquote>In physics, the facts of nature are given to us. They may be broken down into their simple elements in the laboratory and their movements observed. On the other hand, we do not know the laws explaining the movements of physical particles; they are <em>unmotivated</em>.</blockquote>Rothbard goes on to make the point that human action is <i>motivated</i> and thus economics is built on the basis of axioms. We can then deduce laws from these axioms, but, as Rothbard explains, "there are no simple elements of 'facts' in human action; the events of history are complex phenomena, which cannot 'test' anything."<br />Using the models that work so well for physicists, mathematicians on Wall Street got it spectacularly wrong in the mortgage and derivatives markets, just as mathematical economists can never predict the future with any accuracy. Motivated human behavior cannot be modeled.<br />But the mathematicians or "quants" underscore all of Wall Street's financial engineering, a process that takes a few pieces of paper and folds their attributes together to make new products, most times hoping to avoid taxes and regulation. Author Brendan Moynihan describes this engineering in his book <i><a href="http://www.amazon.com/gp/product/1118001818?ie=UTF8&amp;tag=misesinsti-20&amp;linkCode=xm2&amp;camp=1789&amp;creativeASIN=1118001818">Financial Origami: How the Wall Street Model Broke</a></i>.<br />Origami is the traditional Japanese art of paper folding wherein amazing shapes and animals are created with just a few simple folds to a piece of paper. Moynihan cleverly extends the metaphor to the financial arena, pointing out that stocks, bonds, and insurance are pieces of paper simply folded by the Wall Street sales force into swaps, options, futures, derivatives of derivatives, and the like.<br />The author is adept at describing derivatives in terms a person can understand. Health-insurance premiums are a call option to have the insurance company pay for our medical care. Auto insurance premiums are like put options, allowing the insured to sell (put) his or her car, if it's totaled, to the insurer at blue-book value.<br />Nobel Prize winners have played a big hand in the creation of derivatives. Milton Friedman's paper on the need for futures markets in currencies paved the way for that market in 1971. But as Moynihan points out, it was Nixon's shutting of the gold window that created the need to mitigate currency and inflation risk.<br />Nobel Laureate Myron Scholes was cocreator of the Black-Scholes-Merton option-pricing model. He and cowinner Robert Merton used their model to blow-up Long Term Capital Management.<br />But it was little-known economist David X. Li's paper in the <i>Journal of Fixed Income</i> that would provide the intellectual foundation for Wall Street's flurry into mortgages. "On Default Correlation: A Copula Function Approach" became "the academic study used to support Wall Street's turning subprime mortgage pools into AAA-rated securities," writes Moynihan. "By the time it was over, the Street would create 64,000 AAA-rated securities, even though only 12 companies in the world had that rating."<br />Robert Stowe England, in his book <i><a href="http://www.amazon.com/gp/product/0313392897?ie=UTF8&amp;tag=misesinsti-20&amp;linkCode=xm2&amp;camp=1789&amp;creativeASIN=0313392897">Black Box Casino: How Wall Street's Risky Shadow Banking Crashed Global Finance</a></i>, says Li's model "relied on the price history of credit default swaps against a given asset to determine the degree of correlation rather than rely on historical loan performance data."<br />"People got very excited about the Gaussian copula because of its mathematical elegance," says Nassim Nicholas Taleb, "but the thing never worked." Taleb, the author of <i><a href="http://www.amazon.com/gp/product/1400063515?ie=UTF8&amp;tag=misesinsti-20&amp;linkCode=xm2&amp;camp=1789&amp;creativeASIN=1400063515">The Black Swan</a></i>, claims any attempt to measure correlation based on past history to be "charlatanism."<br />Subprime mortgages were bundled to become collateralized mortgage obligations (CMOs), which are a form of collateralized debt obligation(CDO). CDOs weren't new; the first rated CDO was assembled by Michael Milken in 1987. But instead of a mixture of investment-grade and junk corporate bonds, in the housing bubble, CDOs were rated AAA based upon Li's work.<br />Mr. England wryly points out, "A cynic might say that the CDO was invented to create a place to dump lower credit quality or junk bonds and hide them among better credits."<br />England quotes Michael Lewis, author of <i><a href="http://www.amazon.com/gp/product/0393338827?ie=UTF8&amp;tag=misesinsti-20&amp;linkCode=xm2&amp;camp=1789&amp;creativeASIN=0393338827">The Big Short</a></i>: "The CDO was, in effect, a credit laundering service for the residents of Lower Middle Class America." For Wall Street it was a machine that "turned lead into gold."<br />Wall Street's CDO mania served to pump up investment-bank leverage. England explains that if level-3 securities were included (level-3 assets, which include CDOs, cannot be valued by using observable measures, such as market prices and models) then Bear Stearns sported leverage of 262 to 1 just before the crash. Lehman was close behind at 225, Morgan Stanley at 222, Citigroup at 212, and Goldman Sachs was levered at 200 to 1.<br />Leverage like that requires either perfection or eventual government bailout for survival.<br />The CDO market created the need for a way to bet against the CDOs and the credit-default-swap (CDS) market was born. Bundling the CDS together created synthetic CDOs. "With synthetic CDOs, Wall Street crossed over to <i>The Matrix</i>," writes England, "a world where reality is simulated by computers."<br />It's England's view that the CDO market "was the casino where the bets were placed. Wall Street became bigger and chancier than Las Vegas and Atlantic City combined — and more." According to Richard Zabel, the total notional value of the entire CDS market was $45 trillion by the end of 2007, at the same time the bond and structured vehicle markets totaled only $25 trillion.<br />So the speculative portion of the CDS market was at least $20 trillion with speculators betting on the possibility of a credit event for securities not owned by either party. England does not see this as a good thing. It's Mr. England's view that credit default swaps concentrated risk in certain financial institutions, instead of disbursing risk.<br />In <a href="http://libertarianpapers.org/2011/32-polleit-mariano-credit-default-swaps/">"Credit Default Swaps from the Viewpoint of Libertarian Property Rights and Contract Credit Default Swaps Theory,"</a> published in <i>Libertarian Papers</i>, authors Thorsten Polleit and Jonathan Mariano contend, "The truth is that CDS provide investors with an efficient and effective instrument for <i>exposing economically unsound and unsustainable fiat money regimes</i> and the economic production structure it creates."<br />Polleit and Mariano explain that credit default swaps make a borrower's credit risk tradable. CDS is like an insurance policy written against the potential of a negative credit event. These derivatives, while being demonized by many observers, serve to increase "the disciplinary pressure on borrowers who are about to build up unsustainable debt levels to consolidate; or it makes borrowers who have become financially overstretched go into default."<br />Mr. England concludes his book saying, "We need a way forward to a safer, sounder financial system where the power of sunlight on financial institutions and markets helps enable free market discipline to work its invisible hand for the good of all."<br />Polleit and Mariano explain that it is the CDS market that provides that sunlight.<br /><div class="book-ad" id="10527-ad"><div class="book-img"><a href="http://mises.org/store/Product.aspx?ProductId=10527" title="Rockwell Jr., Llewellyn H."><img alt="Rockwell Jr., Llewellyn H." border="0" src="http://mises.org/store/Assets/ProductImages/EBOKB908.jpg" /></a> </div><div class="book-price"><a href="http://mises.org/store/Product.aspx?ProductId=10527"><span class="line-through">$8.00</span> $5.00</a></div></div>The panic of 2008 was the inevitable collapse of an increasingly rickety fiat-money and banking system — a system where the central bank attempts to direct and manipulate the nation's investment and production with an eye to maximize employment. In a speech delivered to the Federal Reserve Bank of New York, Jim Grant told the central bankers that interest rates should convey information. "But the only information conveyed in a manipulated yield curve is what the Fed wants."<br />Wall Street's math wizards convinced the Masters of the Universe that their numbers don't lie, believing they could model the Federal Reserve's house-of-mirrors market. Maybe the numbers don't lie, but the assumptions do.<br />Advising about mathematical economics, Rothbard wrote, "ignore the fancy welter of equations and look for the assumptions underneath. Invariably they are few in number, simple, and wrong." The same could be said for Dr. Li's model and Scholes's model before him.<br />Until the era of unstable fiat-money regimes ends, the search for scapegoats will continue — because the crashes will never end.Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-43735744442739368542012-03-30T08:00:00.002-07:002012-03-30T08:00:52.133-07:00<div class="editorial-preface"><h1>The Myth of Natural Monopoly </h1><div class="meta">&nbsp;by <a href="http://mises.org/daily/author/425/Thomas-J-DiLorenzo" rel="author">Thomas J. DiLorenzo</a> </div><br />[Originally published in <i>The Review of Austrian Economics</i> 9 (2), 1996.]</div><div class="figure"><img alt="" border="0" src="http://images.mises.org/NaturalMonopolyOnPipes.jpg" /></div><blockquote>The very term "public utility" … is an absurd one. <i>Every</i> good is useful "to the public," and almost every good … may be considered "necessary." Any designation of a few industries as "public utilities" is completely arbitrary and unjustified.<br />— Murray Rothbard, <a href="http://mises.org/resources/196/Power-and-Market-Government-and-the-Economy"><i>Power and Market</i></a></blockquote>Most so-called public utilities have been granted governmental franchise monopolies because they are thought to be "natural monopolies." Put simply, a natural monopoly is said to occur when production technology, such as relatively high fixed costs, causes long-run average total costs to decline as output expands. In such industries, the theory goes, a single producer will eventually be able to produce at a lower cost than any two other producers, thereby creating a "natural" monopoly. Higher prices will result if more than one producer supplies the market.<br />Furthermore, competition is said to cause consumer inconvenience because of the construction of duplicative facilities, e.g., digging up the streets to put in dual gas or water lines. Avoiding such inconveniences is another reason offered for government franchise monopolies for industries with declining long-run average total costs.<br />It is a myth that natural-monopoly theory was developed first by economists, and then used by legislators to "justify" franchise monopolies. The truth is that the monopolies were created decades before the theory was formalized by intervention-minded economists, who then used the theory as an <i>ex post</i> rationale for government intervention. At the time when the first government franchise monopolies were being granted, the large majority of economists understood that large-scale, capital-intensive production did <i>not</i> lead to monopoly, but was an absolutely desirable aspect of the competitive process.<br />The word "process" is important here. If competition is viewed as a dynamic, rivalrous process of entrepreneurship, then the fact that a single producer happens to have the lowest costs <i>at any one point in time</i> is of little or no consequence. The enduring forces of competition — including potential competition — will render free-market monopoly an impossibility.<br />The theory of natural monopoly is also ahistorical. There is no evidence of the "natural-monopoly" story ever having been carried out — of one producer achieving lower long-run average total costs than everyone else in the industry and thereby establishing a permanent monopoly. As discussed below, in many of the so-called public-utility industries of the late 18th and early 19th centuries, there were often literally dozens of competitors.<br /><h2>Economies of Scale During the Franchise Monopoly Era</h2>During the late 19th century, when local governments were beginning to grant franchise monopolies, the general economic understanding was that "monopoly" was caused by government intervention, not the free market, through franchises, protectionism, and other means. Large-scale production and economies of scale were seen as a competitive virtue, not a monopolistic vice. For example, Richard T. Ely, cofounder of the American Economic Association, wrote that "large scale production is a thing which by no means necessarily signifies monopolized production."<a class="noteref" href="http://mises.org/daily/5266#note1" name="ref1">[1]</a> John Bates Clark, Ely's cofounder, wrote in 1888 that the notion that industrial combinations would "destroy competition" should "not be too hastily accepted."<a class="noteref" href="http://mises.org/daily/5266#note2" name="ref2">[2]</a><br /><div class="book-ad" id="main-ad"><div class="book-img"><a href="http://academy.mises.org/courses/the-road-to-serfdom-then-and-now/"><img alt="Mises Academy: Tom DiLorenzo teaches The Road to Serfdom: Then and Now" border="0" src="http://images.mises.org/AcademyAds/MAA_DiLoRenzo_RoadToSerfdom2011.jpg" /></a></div></div>Herbert Davenport of the University of Chicago advised in 1919 that only a few firms in an industry where there are economies of scale does not "require the elimination of competition,"<a class="noteref" href="http://mises.org/daily/5266#note3" name="ref3">[3]</a> and his colleague, James Laughlin, noted that even when "a combination is large, a rival combination may give the most spirited competition"<a class="noteref" href="http://mises.org/daily/5266#note4" name="ref4">[4]</a> Irving Fisher<a class="noteref" href="http://mises.org/daily/5266#note5" name="ref5">[5]</a> and Edwin R.A. Seligman<a class="noteref" href="http://mises.org/daily/5266#note6" name="ref6">[6]</a> both agreed that large-scale production produced <i>competitive</i> benefits through cost savings in advertising, selling, and less cross-shipping.<br />Large-scale production units unequivocally benefited the consumer, according to turn-of-the-century economists. For without large-scale production, according to Seligman, "the world would revert to a more primitive state of well being, and would virtually renounce the inestimable benefits of the best utilization of capital."<a class="noteref" href="http://mises.org/daily/5266#note7" name="ref7">[7]</a> Simon Patten of the Wharton School expressed a similar view that "the combination of capital does not cause any economic disadvantage to the community. … Combinations are much more efficient than were the small producers whom they displaced."<a class="noteref" href="http://mises.org/daily/5266#note8" name="ref8">[8]</a><br />Like virtually every other economist of the day, Columbia's Franklin Giddings viewed competition much like the modern-day Austrian economists do, as a dynamic, rivalrous process. Consequently, he observed that<br /><blockquote>competition in some form is a permanent economic process. … Therefore, when market competition seems to have been suppressed, we should inquire what has become of the forces by which it was generated. We should inquire, further, to what degree market competition actually is suppressed or converted into other forms.<a class="noteref" href="http://mises.org/daily/5266#note9" name="ref9">[9]</a></blockquote>In other words, a "dominant" firm that underprices all its rivals at any one point in time has not suppressed competition, for competition is "a permanent economic process."<br />David A. Wells, one of the most popular economic writers of the late 19th century, wrote that "the world demands abundance of commodities, and demands them cheaply; and experience shows that it can have them only by the employment of great capital upon extensive scale."<a class="noteref" href="http://mises.org/daily/5266#note10" name="ref10">[10]</a> And George Gunton believed that<br /><blockquote>concentration of capital does not drive small capitalists out of business, but simply integrates them into larger and more complex systems of production, in which they are enabled to produce … more cheaply for the community and obtain a larger income for themselves. … Instead of concentration of capital tending to destroy competition the reverse is true. … By the use of large capital, improved machinery and better facilities the trust can and does undersell the corporation.<a class="noteref" href="http://mises.org/daily/5266#note11" name="ref11">[11]</a></blockquote>The above quotations are not a selected, but rather a comprehensive list. It may seem odd by today's standards, but as A.W. Coats pointed out, by the late 1880s there were only ten men who had attained full-time professional status as economists in the United States.<a class="noteref" href="http://mises.org/daily/5266#note12" name="ref12">[12]</a> Thus, the above quotations cover virtually every professional economist who had anything to say about the relationship between economies of scale and competitiveness at the turn of the century.<br />The significance of these views is that these men observed firsthand the advent of large-scale production and did not see it leading to monopoly, "natural" or otherwise. In the spirit of the Austrian School, they understood that competition was an ongoing process, and that market dominance was always necessarily temporary in the absence of monopoly-creating government regulation. This view is also consistent with my own research findings that the ''trusts" of the late 19th century were in fact dropping their prices and expanding output faster than the rest of the economy — they were the most dynamic and competitive of all industries, not monopolists.<a class="noteref" href="http://mises.org/daily/5266#note13" name="ref13">[13]</a> Perhaps this is why they were targeted by protectionist legislators and subjected to "antitrust" laws.<br />The economics profession came to embrace the theory of natural monopoly after the 1920s, when it became infatuated with "scientism" and adopted a more or less engineering theory of competition that categorized industries in terms of constant, decreasing, and increasing returns to scale (declining average total costs). According to this way of thinking, engineering relationships determined market structure and, consequently, competitiveness. The meaning of competition was no longer viewed as a behavioral phenomenon, but an engineering relationship. With the exception of such economists as Joseph Schumpeter, Ludwig von Mises, Friedrich Hayek, and other members of the Austrian School, the ongoing <i>process</i> of competitive rivalry and entrepreneurship was largely ignored.<br /><h2>How "Natural" Were the Early Natural Monopolies?</h2>There is no evidence at all that at the outset of public-utility regulation there existed any such phenomenon as a "natural monopoly." As Harold Demsetz has pointed out:<br /><blockquote>Six electric light companies were organized in the one year of 1887 in New York City. Forty-five electric light enterprises had the legal right to operate in Chicago in 1907. Prior to 1895, Duluth, Minnesota, was served by five electric lighting companies, and Scranton, Pennsylvania, had four in 1906. … During the latter part of the 19th century, competition was the usual situation in the gas industry in this country. Before 1884, six competing companies were operating in New York City … competition was common and especially persistent in the telephone industry … Baltimore, Chicago, Cleveland, Columbus, Detroit, Kansas City, Minneapolis, Philadelphia, Pittsburgh, and St. Louis, among the larger cities, had at least two telephone services in 1905.<a class="noteref" href="http://mises.org/daily/5266#note14" name="ref14">[14]</a></blockquote>In an extreme understatement, Demsetz concludes that "one begins to doubt that scale economies characterized the utility industry at the time when regulation replaced market competition."<a class="noteref" href="http://mises.org/daily/5266#note15" name="ref15">[15]</a><br /><div class="figure-left"><a href="http://mises.org/store/Power-and-Market-P322.aspx"><img src="http://mises.org/store/Assets/ProductImages/Thumbnails/SS448_T.jpg" /></a></div>A most instructive example of the non-existence of natural monopoly in the utility industries is provided in a 1936 book by economist George T. Brown entitled "The Gas Light Company of Baltimore," which bears the misleading subtitle, "A Study of Natural Monopoly."<a class="noteref" href="http://mises.org/daily/5266#note16" name="ref16">[16]</a> The book presents "the study of the evolutionary character of utilities" in general, with special emphasis on the Gas Light Company of Baltimore, the problems of which "are not peculiar either to the Baltimore company or the State of Maryland, but are typical of those met everywhere in the public utility industry."<a class="noteref" href="http://mises.org/daily/5266#note17" name="ref17">[17]</a><br />The history of the Gas Light Company of Baltimore figures prominently in the whole history of natural monopoly, in theory and in practice, for the influential Richard T. Ely, who was a professor of economics at Johns Hopkins University in Baltimore, chronicled the company's problems in a series of articles in the <i>Baltimore</i> <i>Sun</i> that were later published as a widely-sold book. Much of Ely's analysis came to be the accepted economic dogma with regard to the theory of natural monopoly.<br />The history of the Gas Light Company of Baltimore is that, from its founding in 1816, it constantly struggled with new competitors. Its response was not only to try to compete in the marketplace, but also to lobby the state and local government authorities to refrain from granting corporate charters to its competitors. The company operated with economies of scale, but that did not prevent numerous competitors from cropping up.<br />"Competition is the life of business," the <i>Baltimore</i> <i>Sun</i> editorialized in 1851 as it welcomed news of new competitors in the gas light business.<a class="noteref" href="http://mises.org/daily/5266#note18" name="ref18">[18]</a> The Gas Light Company of Baltimore, however, "objected to the granting of franchise rights to the new company."<a class="noteref" href="http://mises.org/daily/5266#note19" name="ref19">[19]</a><br />Brown states that "gas companies in other cities were exposed to ruinous competition," and then catalogues how those same companies sought desperately to enter the Baltimore market. But if such competition was so "ruinous," why would these companies enter new — and presumably just as "ruinous" — markets? Either Brown's theory of "ruinous competition" — which soon came to be the generally accepted one — was incorrect, or those companies were irrational gluttons for financial punishment.<br />By ignoring the <i>dynamic</i> nature of the competitive process, Brown made the same mistake that many other economists still make: believing that "excessive" competition can be "destructive" if low-cost producers drive their less efficient rivals from the market.<a class="noteref" href="http://mises.org/daily/5266#note20" name="ref20">[20]</a> Such competition may be "destructive" to high-cost competitors, but it is beneficial to consumers.<br />In 1880 there were three competing gas companies in Baltimore who fiercely competed with one another. They tried to merge and operate as a monopolist in 1888, but a new competitor foiled their plans: "Thomas Aha Edison introduced the electric light which threatened the existence of all gas companies."<a class="noteref" href="http://mises.org/daily/5266#note21" name="ref21">[21]</a> From that point on there was competition between both gas and electric companies, all of which incurred heavy fixed costs which led to economies of scale. Nevertheless, no free-market or "natural" monopoly ever materialized.<br />When monopoly did appear, it was solely because of government intervention. For example, in 1890 a bill was introduced into the Maryland legislature that "called for an annual payment to the city from the Consolidated [Gas Company] of $10,000 a year and 3 percent of all dividends declared in return for the privilege of enjoying a 25-year monopoly.<a class="noteref" href="http://mises.org/daily/5266#note22" name="ref22">[22]</a> This is the now-familiar approach of government officials colluding with industry executives to establish a monopoly that will gouge the consumers, and then sharing the loot with the politicians in the form of franchise fees and taxes on monopoly revenues. This approach is especially pervasive today in the cable TV industry.<br />Legislative "regulation" of gas and electric companies produced the predictable result of monopoly prices, which the public complained bitterly about. Rather than deregulating the industry and letting competition control prices, however, public utility regulation was adopted to supposedly appease the consumers who, according to Brown, "felt that the negligent manner in which their interests were being served [by legislative control of gas and electric prices] resulted in high rates and monopoly privileges. The development of utility regulation in Maryland typified the experience of other states."<a class="noteref" href="http://mises.org/daily/5266#note23" name="ref23">[23]</a><br /><div class="figure"><a href="http://mises.org/store/Hamiltons-Curse-P534.aspx"><img src="http://mises.org/store/Assets/ProductImages/Thumbnails/B900_T.jpg" /></a></div>Not all economists were fooled by the "natural-monopoly" theory advocated by utility industry monopolists and their paid economic advisers. In 1940 economist Horace M. Gray, an assistant dean of the graduate school at the University of Illinois, surveyed the history of "the public utility concept," including the theory of "natural" monopoly. "During the 19th century," Gray observed, it was widely believed that "the public interest would be best promoted by grants of special privilege to private persons and to corporations" in many industries.<a class="noteref" href="http://mises.org/daily/5266#note24" name="ref24">[24]</a> This included patents, subsidies, tariffs, land grants to the railroads, and monopoly franchises for "public" utilities. "The final result was monopoly, exploitation, and political corruption."<a class="noteref" href="http://mises.org/daily/5266#note25" name="ref25">[25]</a><br />With regard to "public" utilities, Gray records that "between 1907 and 1938, the policy of state-created, state-protected monopoly became firmly established over a significant portion of the economy and became the keystone of modern public utility regulation."<a class="noteref" href="http://mises.org/daily/5266#note26" name="ref26">[26]</a> From that time on, "the public utility status was to be the haven of refuge for all aspiring monopolists who found it too difficult, too costly, or too precarious to secure and maintain monopoly by private action alone."<a class="noteref" href="http://mises.org/daily/5266#note27" name="ref27">[27]</a><br />In support of this contention, Gray pointed out how virtually every aspiring monopolist in the country tried to be designated a "public utility," including the radio, real estate, milk, air transport, coal, oil, and agricultural industries, to name but a few. Along these same lines, "the whole NRA experiment may be regarded as an effort by big business to secure legal sanction for its monopolistic practices."<a class="noteref" href="http://mises.org/daily/5266#note28" name="ref28">[28]</a> Those lucky industries that were able to be politically designated as "public utilities" also used the public utility concept to keep out the competition.<br />The role of economists in this scheme was to construct what Gray called a "confused rationalization" for "the sinister forces of private privilege and monopoly," i.e., the theory of "natural" monopoly. "The protection of consumers faded into the background."<a class="noteref" href="http://mises.org/daily/5266#note29" name="ref29">[29]</a><br />More recent economic research supports Gray's analysis. In one of the first statistical studies of the effects of rate regulation in the electric utilities industry, published in 1962, George Stigler and Claire Friedland found no significant differences in prices and profits of utilities with and without regulatory commissions from 1917 to 1932.<a class="noteref" href="http://mises.org/daily/5266#note30" name="ref30">[30]</a> Early rate regulators did <i>not</i> benefit the consumer, but were rather "captured" by the industry, as happened in so many other industries, from trucking to airlines to cable television. It is noteworthy — but not very laudable — that it took economists almost 50 years to begin studying the actual, as opposed to the theoretical, effects of rate regulation.<br />Sixteen years after the Stigler-Friedland study, Gregg Jarrell observed that 25 states substituted state for municipal regulation of electric power ratemaking between 1912 and 1917, the effects of which were to <i>raise</i> prices by 46 percent and profits by 38 percent, while reducing the level of output by 23 percent.<a class="noteref" href="http://mises.org/daily/5266#note31" name="ref31">[31]</a> Thus, municipal regulation failed to hold prices down. But the utilities wanted an even more rapid increase in their prices, so they successfully lobbied for state regulation under the theory that state regulators would be less pressured by local customer groups, than mayors and city councils would be.<br />These research results are consistent with Horace Gray's earlier interpretation of public utility rate regulation as an anticonsumer, monopolistic, price-fixing scheme.<br /><h2>The Problem of "Excessive Duplication"</h2>In addition to the economies of scale canard, another reason that has been given for granting monopoly franchises to "natural monopolies" is that allowing too many competitors is too disruptive. It is too costly to a community, the argument goes, to allow several different water suppliers, electric power producers, or cable TV operators to dig up the streets. But as Harold Demsetz has observed:<br /><blockquote>[T]he problem of excessive duplication of distribution systems is attributable to the failure of communities to set a proper price on the use of these scarce resources. The right to use publicly owned thoroughfares is the right to use a scarce resource. The absence of a price for the use of these resources, a price high enough to reflect the opportunity costs of such alternative uses as the servicing of uninterrupted traffic and unmarred views, will lead to their overutilization. The setting of an appropriate fee for the use of these resources would reduce the degree of duplication to optimal levels.<a class="noteref" href="http://mises.org/daily/5266#note32" name="ref32">[32]</a></blockquote><div class="figure-left"><a href="http://mises.org/store/Antitrust-and-Monopoly-Anatomy-of-a-Policy-Failure-P296.aspx"><img src="http://mises.org/store/Assets/ProductImages/Thumbnails/B589_T.jpg" /></a></div>Thus, just as the problem with "natural" monopolies is actually caused by government intervention, so is the "duplication of facilities" problem. It is created by the failure of governments to put a price on scarce urban resources. More precisely, the problem is really caused by the fact that governments own the streets under which utility lines are placed, and that the impossibility of rational economic calculation within socialistic institutions precludes them from pricing these resources appropriately, as they would under a private-property competitive-market regime.<br />Contrary to Demsetz's claim, rational economic pricing in this case is impossible precisely because of government ownership of roads and streets. Benevolent and enlightened politicians, even ones who have studied at the feet of Harold Demsetz, would have no rational way of determining what prices to charge. Murray Rothbard explained all this more than 25 years ago:<br /><blockquote>The fact that the government must give permission for the use of its streets has been cited to justify stringent government regulations of 'public utilities,' many of which (like water or electric companies) must make use of the streets. The regulations are then treated as a voluntary <i>quid pro quo.</i> But to do so overlooks the fact that governmental ownership of the streets is itself a permanent act of intenention. Regulation of public utilities or of any other industry discourages investment in these industries, thereby depriving consumers of the best satisfaction of their wants. For it distorts the resource allocations of the free market.<a class="noteref" href="http://mises.org/daily/5266#note33" name="ref33">[33]</a></blockquote>The so-called "limited-space monopoly" argument for franchise monopolies, Rothbard further argued, is a red herring, for how many firms will be profitable in any line of production<br /><blockquote>is an institutional question and depends on such concrete data as the degree of consumer demand, the type of product sold, the physical productivity of the processes, the supply and pricing of factors, the forecasting of entrepreneurs, etc. Spatial limitations may be unimportant.<a class="noteref" href="http://mises.org/daily/5266#note34" name="ref34">[34]</a></blockquote>In fact, even if spatial limitations do allow only one firm to operate in a particular geographical market, that does not necessitate monopoly, for "monopoly" is "a meaningless appellation, unless monopoly price is achieved," and "<i>all</i> prices on a free market are competitive."<a class="noteref" href="http://mises.org/daily/5266#note35" name="ref35">[35]</a> Only government intervention can generate monopolistic prices.<br />The only way to achieve a free-market price that reflects true opportunity costs and leads to optimal levels of "duplication" is through free exchange in a genuinely free market, a sheer impossibility without private property and free markets.<a class="noteref" href="http://mises.org/daily/5266#note36" name="ref36">[36]</a> Political fiat is simply not a feasible substitute for the prices that are determined by the free market because rational economic calculation is impossible without markets.<br />Under private ownership of streets and sidewalks, individual owners are offered a tradeoff of lower utility prices for the temporary inconvenience of having a utility company run a trench through their property. If "duplication" occurs under such a system, it is because freely choosing individuals value the extra service or lower prices or both more highly than the cost imposed on them by the inconvenience of a temporary construction project on their property. Free markets necessitate neither monopoly nor "excessive duplication" in any economically meaningful sense.<br /><h2>Competition for the Field</h2>The existence of economies of scale in water, gas, electricity, or other "public utilities" in no way necessitates either monopoly or monopoly pricing. As Edwin Chadwick wrote in 1859, a system of competitive bidding for the services of private utility franchises can eliminate monopoly pricing as long as there is competition "for the field."<a class="noteref" href="http://mises.org/daily/5266#note37" name="ref37">[37]</a> As long as there is vigorous bidding for the franchise, the results can be both avoidance of duplication of facilities and competitive pricing of the product or service. That is, bidding for the franchise can take place in the form of awarding the franchise to the utility that offers consumers the lowest price for some constant quality of service (as opposed to the highest price for the franchise).<br /><div class="figure"><a href="http://mises.org/store/Against-Intellectual-Monopoly-P552.aspx"><img src="http://mises.org/store/Assets/ProductImages/Thumbnails/B914_T.jpg" /></a></div>Harold Demsetz revived interest in the concept of "competition for the field" in a 1968 article.<a class="noteref" href="http://mises.org/daily/5266#note38" name="ref38">[38]</a> The theory of natural monopoly, Demsetz pointed out, fails to "reveal the logical steps that carry it from scale economies in production to monopoly price in the market place."<a class="noteref" href="http://mises.org/daily/5266#note39" name="ref39">[39]</a> If one bidder can do the job at less cost than two or more,<br /><blockquote>then the bidder with the lowest bid price for the entire job will be awarded the contract, whether the good be cement, electricity, stamp vending machines, or whatever, but the lowest bid price need not be a monopoly price. … The natural monopoly theory provides no logical basis for monopoly prices.<a class="noteref" href="http://mises.org/daily/5266#note40" name="ref40">[40]</a></blockquote>There is no reason to believe that the bidding process will not be competitive. Hanke and Walters have shown that such a franchise bidding process operates very efficiently in the French water supply industry.<a class="noteref" href="http://mises.org/daily/5266#note41" name="ref41">[41]</a><br /><h2>The Natural-Monopoly Myth: Electric Utilities</h2>According to natural-monopoly theory, competition cannot persist in the electric-utility industry. But the theory is contradicted by the fact that competition has in fact persisted for decades in dozens of US cities. Economist Walter J. Primeaux has studied electric utility competition for more than 20 years. In his 1986 book, <i>Direct Utility Competition: The Natural Monopoly Myth</i>, he concludes that in those cities where there is direct competition in the electric utility industries:<br /><ul><li>Direct rivalry between two competing firms has existed for very long periods of time — for over 80 years in some cities;</li><li>The rival electric utilities compete vigorously through prices and services;</li><li>Customers have gained substantial benefits from the competition, compared to cities were there are electric utility monopolies;</li><li>Contrary to natural-monopoly theory, costs are actually lower where there are two firms operating;</li><li>Contrary to natural-monopoly theory, there is no more excess capacity under competition than under monopoly in the electric utility industry;</li><li>The theory of natural monopoly fails on every count: competition exists, price wars are not "serious," there is better consumer service and lower prices with competition, competition persists for very long periods of time, and consumers themselves prefer competition to regulated monopoly; and</li><li>Any consumer satisfaction problems caused by dual power lines are considered by consumers to be less significant than the benefits from competition.<a class="noteref" href="http://mises.org/daily/5266#note42" name="ref42">[42]</a></li></ul>Primeaux also found that although electric utility executives generally recognized the consumer benefits of competition, they personally preferred monopoly!<br />Ten years after the publication of Primeaux's book, at least one state — California — is transforming its electric utility industry "from a monopoly controlled by a handful of publicly held utilities to an open market."<a class="noteref" href="http://mises.org/daily/5266#note43" name="ref43">[43]</a> Other states are moving in the same direction, finally abandoning the baseless theory of natural monopoly in favor of natural competition:<a class="noteref" href="http://mises.org/daily/5266#note44" name="ref44">[44]</a><br /><ul><li>The Ormet Corporation, an aluminum smelter in West Virginia, obtained state permission to solicit competitive bids from 40 electric utilities;</li><li>Alcan Aluminum Corp. in Oswego, New York has taken advantage of technological breakthroughs that allowed it to build a new power generating plant next to its mill, cutting its power costs by two-thirds. Niagara Mohawk, its previous (and higher-priced) power supplier, is suing the state to prohibit Alcan from using its own power;</li><li>Arizona political authorities allowed Cargill, Inc. to buy power from anywhere in the West; the company expects to save $8 million per year;</li><li>New federal laws permit utilities to import lower-priced power, using the power lines of other companies to transport it;</li><li>Wisconsin Public Service commissioner Scott Neitzel recently declared, "free markets are the best mechanism for delivering to the consumer … the best service at the lowest cost";</li><li>The prospect of future competition is already forcing some electric utility monopolies to cut their costs and prices. When the TVAwas faced with competition from Duke Power in 1988, it managed to hold its rates steady without an increase for the next several years.</li></ul>The potential benefits to the US economy from demonopolization of the electric utility industry are enormous. Competition will initially save consumers at least $40 billion per year, according to utility economist Robert Michaels.<a class="noteref" href="http://mises.org/daily/5266#note45" name="ref45">[45]</a> It will also spawn the development of new technologies that will be economical to develop because of lower energy costs. For example, "automakers and other metal benders would make much more intensive use of laser cutting tools and laser welding machines, both of which are electron guzzlers.<a class="noteref" href="http://mises.org/daily/5266#note46" name="ref46">[46]</a><br /><h2>The Natural-Monopoly Myth: Cable TV</h2>Cable television is also a franchise monopoly in most cities because of the theory of natural monopoly. But the monopoly in this industry is anything but "natural." Like electricity, there are dozens of cities in the United States where there are competing cable firms. "Direct competition … currently occurs in at least three dozen jurisdictions nationally."<a class="noteref" href="http://mises.org/daily/5266#note47" name="ref47">[47]</a><br /><div class="bigger pullquote">"The theory of natural monopoly is an economic fiction. No such thing as a 'natural' monopoly has ever existed."</div>The existence of longstanding competition in the cable industry gives the lie to the notion that that industry is a "natural monopoly" and is therefore in need of franchise monopoly regulation. The cause of monopoly in cable TV is government regulation, not economies of scale. Although cable operators complain of "duplication," it is important to keep in mind that "while over-building an existing cable system can lower the profitability of the incumbent operator, it unambiguously improves the position of consumers who face prices determined not by historical costs, but by the interplay of supply and demand."<a class="noteref" href="http://mises.org/daily/5266#note48" name="ref48">[48]</a><br />Also like the case of electric power, researchers have found that in those cities where there are competing cable companies prices are about 23 percent below those of monopolistic cable operators.<a class="noteref" href="http://mises.org/daily/5266#note49" name="ref49">[49]</a> Cablevision of Central Florida, for example, reduced its basic prices from $12.95 to $6.50 per month in "duopoly" areas in order to compete. When Telestat entered Riviera Beach, Florida, it offered 26 channels of basic service for $5.75, compared to Comcast's 12channel offering for $8.40 per month. Comcast responded by upgrading its service and dropping its prices.<a class="noteref" href="http://mises.org/daily/5266#note50" name="ref50">[50]</a> In Presque Isle, Maine, when the city government invited competition, the incumbent firm quickly upgraded its service from only 12 to 54 channels.<a class="noteref" href="http://mises.org/daily/5266#note51" name="ref51">[51]</a><br />In 1987 the Pacific West Cable Company sued the city of Sacramento, California on First Amendment grounds for blocking its entry into the cable market. A jury found that "the Sacramento cable market was not a natural monopoly and that the claim of natural monopoly was a sham used by defendants as a pretext for granting a single cable television franchise … to promote the making of cash payments and provision of 'in-kind' services … and to obtain increased campaign contribution."<a class="noteref" href="http://mises.org/daily/5266#note52" name="ref52">[52]</a> The city was forced to adopt a competitive cable policy, the result of which was that the incumbent cable operator, Scripps Howard, dropped its monthly price from $14.50 to $10 to meet a competitor's price. The company also offered free installation and three months free service in every area where it had competition.<br />Still, the big majority of cable systems in the U.S. are franchise monopolies for precisely the reasons stated by the Sacramento jury: they are mercantilistic schemes whereby a monopoly is created to the benefit of cable companies, who share the loot with the politicians through campaign contributions, free air time on "community service programming," contributions to local foundations favored by the politicians, stock equity and consulting contracts to the politically well connected, and various gifts to the franchise authorities.<br />In some cities, politicians collect these indirect bribes for five to ten years or longer from multiple companies before finally granting a franchise. They then benefit from part of the monopoly rents earned by the monopoly franchisee. As former FCC chief economist Thomas Hazlett, who is perhaps the nation's foremost authority on the economics of the cable TV industry, has concluded, "we may characterize the franchising process as nakedly inefficient from a welfare perspective, although it does produce benefits for municipal franchiser."<a class="noteref" href="http://mises.org/daily/5266#note53" name="ref53">[53]</a> The barrier to entry in the cable TV industry is not economies of scale, but the political price-fixing conspiracy that exists between local politicians and cable operators.<br /><h2>The Natural-Monopoly Myth: Telephone Services</h2>The biggest myth of all in this regard is the notion that telephone service is a natural monopoly. Economists have taught generations of students that telephone service is a "classic" example of market failure and that government regulation in the "public interest" was necessary. But as Adam D. Thierer recently proved, there is nothing at all "natural" about the telephone monopoly enjoyed by AT&amp;T for so many decades; it was purely a creation of government intervention."<a class="noteref" href="http://mises.org/daily/5266#note54" name="ref54">[54]</a><br />Once AT&amp;T's initial patents expired in 1893, dozens of competitors sprung up. "By the end of 1894 over 80 new independent competitors had already grabbed 5 percent of total market share … after the turn of the century, over 3,000 competitors existed.<a class="noteref" href="http://mises.org/daily/5266#note55" name="ref55">[55]</a> In some states there were over 200 telephone companies operating simultaneously. By 1907, AT&amp;T's competitors had captured 51 percent of the telephone market and prices were being driven sharply down by the competition. Moreover, there was no evidence of economies of scale, and entry barriers were obviously almost nonexistent, contrary to the standard account of the theory of natural monopoly as applied to the telephone industry.<a class="noteref" href="http://mises.org/daily/5266#note56" name="ref56">[56]</a><br />The eventual creation of the telephone monopoly was the result of a conspiracy between AT&amp;T and politicians who wanted to offer "universal telephone service" as a pork-barrel entitlement to their constituents. Politicians began denouncing competition as "duplicative," "destructive," and "wasteful," and various economists were paid to attend congressional hearings in which they somberly declared telephony a natural monopoly. "There is nothing to be gained by competition in the local telephone business," one congressional hearing concluded.<a class="noteref" href="http://mises.org/daily/5266#note57" name="ref57">[57]</a><br />The crusade to <i>create</i> a monopolistic telephone industry by government fiat finally succeeded when the federal government used World War I as an excuse to nationalize the industry in 1918. AT&amp;T still operated its phone system, but it was controlled by a government commission headed by the postmaster general. Like so many other instances of government regulation, AT&amp;T quickly "captured" the regulators and used the regulatory apparatus to eliminate its competitors. "By 1925 not only had virtually every state established strict rate regulation guidelines, but local telephone competition was either discouraged or explicitly prohibited within many of those jurisdictions."<a class="noteref" href="http://mises.org/daily/5266#note58" name="ref58">[58]</a><br /><h2>Conclusions</h2>The theory of natural monopoly is an economic fiction. No such thing as a "natural" monopoly has ever existed. The history of the so-called public utility concept is that the late 19th and early 20th century "utilities" competed vigorously and, like all other industries, they did not like competition. They first secured government-sanctioned monopolies, and <i>then,</i> with the help of a few influential economists, constructed an <i>ex</i> <i>post</i> rationalization for their monopoly power.<br />This has to be one of the greatest corporate public relations coups of all time. "By a soothing process of rationalization," wrote Horace M. Gray more than 50 years ago, "men are able to oppose monopolies in general but to approve certain types of monopolies. … Since these monopolies were 'natural' and since nature is beneficent, it followed that they were 'good' monopolies. … Government was therefore justified in establishing 'good' monopolies."<a class="noteref" href="http://mises.org/daily/5266#note59" name="ref59">[59]</a><br /><div class="book-ad" id="main-ad"><div class="book-img"><a href="http://mises.org/store/How-Capitalism-Saved-America-P260.aspx"><img border="0" src="http://mises.org/store/Assets/ProductImages/B510.jpg" /></a></div><div class="book-price"><a href="http://mises.org/store/How-Capitalism-Saved-America-P260.aspx"><span style="text-decoration: line-through;">$14.95</span> $14.00</a></div></div>In industry after industry, the natural monopoly concept is finally eroding. Electric power, cable TV, telephone services, and the mail, are all on the verge of being deregulated, either legislatively or <i>de facto,</i> due to technological change. Introduced in the United States at about the same time communism was introduced to the former Soviet Union, franchise monopolies are about to become just as defunct. Like all monopolists, they will use every last resource to lobby to maintain their monopolistic privileges, but the potential gains to consumers of free markets are too great to justify them. The theory of natural monopoly is a 19th century economic fiction that defends 19th century (or 18th century, in the case of the US Postal Service) monopolistic privileges, and has no useful place in the 21st century American economy.Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-5657210720188610032012-03-27T10:57:00.002-07:002012-03-27T10:57:50.182-07:00<table border="0" cellpadding="0" cellspacing="0"><tbody><tr valign="top"><!-- Topic Cell --><td id="dbtopiccell"><div class="discussionboardtopiccontent"><br />A paper published in <em>Cell</em> is a tour de force of 'omics in one indivudal -- the senior investigator, Dr. Michael Snyder. Here we discuss the findings and implications of such a compehensive 'omic assessment.<br />Chen R, et al. Personal omics profiling reveals dynamic molecular and medical phenotypes. <em>Cell.</em> 2012;148:1293-1207.<br />______________________<br />Below is a transcript of Dr. Topol's post "A Landmark N of 1 'Panor-omic' Study." We look forward to your feedback.<br />Eric Topol here to discuss a landmark paper in the journal <em>Cell</em>. This is the first time we've actually reviewed a paper in <em>Cell</em> on the Genomic Medicine site. It's a particularly unique paper. It is an N of 1, "panor-omic," comprehensive, very detailed 'omic study of a single individual. In this case, the individual is Michael Snyder, a geneticist from Stanford University, with 39 other collaboratives, predominantly from Stanford, but also from Yale and Spain.<br /><br />Basically, what this entailed was a serial examination of 20 different blood draws that Michael Snyder had over a 14-month period. During that time, virtually everything you could imagine was assessed. Not only was there DNA sequencing at very high, deep coverage, high accuracy and resolution, but also there was gene expression. There was RNA seq to detect any issues in RNA. There were protein and metabolite assays that were comprehensive, along with autoantibody, along with micro RNAs -- all of this over a 14-month period.<br /><br />As you would expect, the susceptibility to some diseases through, not just common variations, but rare variations were detected, including a key rare variant associated with diabetes mellitus and another rare variant with high penetrance for aplastic anemia.<br /><br />But what was interesting during this study that spanned over 14 months was that Michael Snyder had two viral infections. Right around 300 days, he had a viral infection that led to a marked increase in genes that were associated with inflammation, interferon, and the conventional serum CRP that we measure. With that, his glucoses shot up, as well as his HbA1C, even up to about 6.7% from what had been normal, with fasting glucoses that were in the mid-100s. Then he went on to a lifestyle program to lose weight and exercise more, and was able to reverse the clinical manifestations of diabetes.<br /><br />This is a remarkable paper. It is an N of 1 study with an exceptional amount of billions and billions of data points across all the different 'omics, and even expanding into autoantibody formation. It also tells us about how gene pathways and gene expression change over time. It's not just a measurement once, it's dynamic -- the variants in one's genome, as they can be expressed differently in different tissues, they also can be expressed differently as a function of time. It's highly instructive.<br /><br />The question, of course, is, can this be done, this type of study, with an amazing amount of bioinformatics and data -- can this be done in the real world. Should it be done in the real world? Well, certainly, as we have discussed in prior segments, this is something that could be of immense value in patients with rare, idiopathic, we-don't-know-the-cause, conditions. Certainly for serious cancers, some type of "panor-omic" view could be helpful if we could do this quickly before therapies were started, or, of course, in refractory or relapsed cases.<br /><br />Ultimately, when this is all done through a means of algorithm software to process all this data and when it can be markedly reduced in expense, some of these components will be useful for prevention as was used in this classic case.<br /><br />For example, with Michael Snyder being att significant risk, of developing aplastic anemia, he can go into prevention mode and surveillance, just as he did with the known risk of diabetes. In fact, much of this I had written about in the book <em>Creative Destruction of Medicine</em> -- but now it's already been actualized as of March 15, 2012. When you combine all these 'omics with wireless sensor data and anatomical data through high resolution imaging, like the ultrasound pocket echo, you get an N of 1 that is truly unprecedented.<br /><br />I'll be interested in your views about this "panor-omic" N of 1 landmark study, a tour de force. It will be interesting to see what you have to say. Thanks very much for your attention.</div></td></tr></tbody></table>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-90015707837565968482012-03-21T11:55:00.003-07:002012-03-21T11:55:27.894-07:00<h1>The Vampire Economy and the Market </h1><div class="meta"><strong>Mises Daily:</strong> Wednesday, March 21, 2012 by <a href="http://mises.org/daily/author/1018/Ben-ONeill" rel="author">Ben O'Neill</a> </div><div class="ui-tabs ui-widget ui-widget-content ui-corner-all" id="tabs" jquery17107309542541775515="3"><ul class="ui-tabs-nav ui-helper-reset ui-helper-clearfix ui-widget-header ui-corner-all"><li class="ui-state-default ui-corner-top ui-tabs-selected ui-state-active" jquery17107309542541775515="8"><div class="addthis_toolbox addthis_default_style "><plusone callback="_at_plusonecallback" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market" lang="null" size="medium"><div class="atclear"></div></plusone></div>[This article was originally published in <a href="http://www.cevroinstitut.cz/en/Section/academic+press/nppe/"><i>New Perspectives in Political Economy</i></a>, the academic journal of CEVRO Institute (School of Legal and Social Studies), vol. 7(1), pp. 141–154.]</li></ul><div class="ui-tabs-panel ui-widget-content ui-corner-bottom" id="ArticleTab"><div id="DailyArticle"><div class="figure"><img alt="" border="0" src="http://images.mises.org/5963/Fascisti.jpg" /></div><h2>1. Authoritarian Capitalism (Fascism) and Liberal Capitalism (the Free Market) </h2>What is sometimes referred to as "authoritarian capitalism," or fascism, is in fact a variety of statism, specifically socialism, the system of political economy in which the prerogatives of ownership over the means of production and distribution are vested in the state. Under the fascist economic system, private capitalists are nominally regarded as the owners of the means of production, meaning that they hold property titles to these assets and are referred to as "owners" of these assets. However, this so-called ownership is merely illusory. The actual prerogatives of ownership are vested, not in the private capitalist, but in the state and its bureaucracy.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note1" name="ref1">[1]</a> It is the state that tells the private capitalist how he must use "his" property, under the threat of confiscation or even imprisonment. In the words of economist Ludwig von Mises, it is "socialism in the outward guise of capitalism."<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note2" name="ref2">[2]</a><br />This is a very different political-economic system from "liberal capitalism," also known as "free-market capitalism." Free-market capitalism is an authentically capitalist system, in which the prerogatives of ownership over the means of production are vested in private citizens, not in the state. Under this system, the means of production are <i>genuinely</i> privately owned, and the private-property owner holds, not just a property title, but, more importantly, the actual prerogatives of ownership and ultimate control. In the system of free-market capitalism, the private-property owner is regarded as having property <i>rights</i> (i.e., an enforceable moral claim to the prerogatives of ownership) that must be respected by all others, including the state and its functionaries.<br />In their purest forms, these two systems of political economy are fundamentally different in kind; in fact, they are polar opposites. However, this opposing nature stems from the degree to which the prerogatives of ownership of ostensibly private property are arrogated to the state — i.e., the degree of state intervention. On the one extreme we have the free market, in which there is no — or at least little — state interference with private-property ownership (which is therefore genuine); on the other extreme we have fascism, in which there is plentiful or total state interference with private-property ownership (which is therefore illusory).<br />Since fascism and the free market are distinguished by state intervention we can therefore see that the two systems are separated by a connecting bridge of interventionism through the system of the "mixed economy." The fascist system can be viewed as a system of hyperinterventionism, accruing when state interference with private-property rights is so extensive that the alleged private ownership of property becomes a mere farce, and the state may properly be regarded as the de facto owner of the means of production and distribution — i.e., there is de facto socialism. For this reason, the analysis of fascism and its long-term viability is very similar to the analysis of interventionism in the mixed economy, and the same kinds of economic and political insights apply.<br /><h2>2. Fascism and the Fusion of Business and State </h2>Fascism is unlike other forms of socialism. Its expropriation of the means of production is done without overt nationalization and is not directed toward an egalitarian goal. It is far more subtle than this, and far more insidious. Fascism can arise by revolution, but it can also arise by gradual measures toward state control in the mixed economy. While noting the similarities between fascism and communism, philosopher Roderick Long observes that<br /><blockquote>there is a difference in emphasis and in strategy between fascism and Communism.… When faced with existing institutions that threaten the power of the state — be they corporations, churches, the family, tradition — the Communist impulse is by and large to <em>abolish</em> them, while the fascist impulse is by and large to <em>absorb</em> them.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note3" name="ref3">[3]</a></blockquote>The fascist <i>economic</i> strategy is also one of absorption: the regime attempts to secure economic growth and prosperity by fusing a "partnership" between business and the state, absorbing business into the state in this process. Such a strategy appeals to those who correctly judge that private business is the locus of production and economic growth but who incorrectly believe that this productivity is enhanced by partnership with government and central planning of production. The fascists, like interventionists more generally, seek to get the "best of both worlds" from the productive powers of private business under capitalism and the central planning of the state under socialism.<br />Of course, the "partnership" between business and state that occurs under fascism is of a coercive nature: the state determines its requirements from business and orders private entrepreneurs to meet these requirements, lest they be expropriated of their remaining property (nominally held), or even imprisoned. In describing the fusion of business and state in Nazi Germany, economist Günter Reimann explains the process as follows:<br /><div class="book-ad" id="371-ad"><div class="book-img"><a href="http://mises.org/store/Product.aspx?ProductId=371" title="Vampire Economy: Doing Business Under Fascism"><img alt="Vampire Economy: Doing Business Under Fascism" border="0" src="http://mises.org/store/Assets/ProductImages/SS182.jpg" /></a> </div><div class="book-price"><a href="http://mises.org/store/Product.aspx?ProductId=371"><span class="line-through">$19.00</span> $17.00</a></div></div><blockquote>The State orders private capital to produce and does not itself function as a producer. Insofar as the State owns enterprises which participate in production, this can be regarded as an exception rather than a general rule. The fascist State does not merely grant the private entrepreneur the right to produce for the market, but insists on production as a duty which must be fulfilled even though there be no profit. The businessman cannot close down his factory or shop because he finds it unprofitable. To do this requires a special permit issues by the authorities.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note4" name="ref4">[4]</a></blockquote>This basic conception of the role of the private entrepreneur puts him at the service of the state, and destroys any notion of self-ownership, including any genuine property rights. He exists, not to pursue his own happiness and satisfy his own personal desires, as is the case under liberal capitalism, but rather to produce for the fascist state. From here, the remaining regulations on his business affairs under this "partnership" are similarly directed toward the ends determined by the state: the state regulates the prices he can charge for his goods; the amount he can buy and sell; whom he can employ or dismiss from employment; the wages he must pay; how much of his profit he may keep (if there is any profit produced); and whether or not he will continue his business or shut it down.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note5" name="ref5">[5]</a><br />In tandem with the enormous body of arbitrary state regulations is the ever-present threat of expropriation. Without any overt nationalization of property the state may send its auditors to scrutinize a business for breaches of regulations, using minor infractions as a pretext for massive fines, amounting essentially to a confiscation of assets.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note6" name="ref6">[6]</a><br /><h2>3. Breakdown of the Rule of Law </h2>Even the fact that every aspect of his business is regulated by the state does not give full appreciation for the perilous situation of the titular owners of property under fascism. In fact, it is not the specific <i>content</i> of regulations, but rather the inevitable breakdown of the rule of law that poses the greatest danger under a system of central planning.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note7" name="ref7">[7]</a><br />The rule of law under the fascist system is replaced with the arbitrary and unconstrained power of the political elite in the state apparatus.<br /><blockquote>The capitalist under fascism has to be not merely a law-abiding citizen, he must be servile to the representatives of the State. He must not insist on "rights" and must not behave as if his private property rights were still sacred. He should be grateful to the Fuehrer that he still has private property.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note8" name="ref8">[8]</a></blockquote>It is the arbitrary power of the fascist regime that is the most important determinant of the relationship between the titular private-property owners and the state. However, it affects not only this relationship, but also the relationship between private citizens themselves.<br /><blockquote>As a rule, the relations between businessmen are still regulated by laws and customs. But customs have changed and modified law, and law has, in turn, been largely replaced by a vague conception of "honor." It is easier for a businessman to win a case in the German courts by appealing to "National-Socialist honor" than by referring to the exact text of the law.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note9" name="ref9">[9]</a></blockquote>Like other citizens, the businessman cannot find justice or challenge the predations of the state, even on sound legal grounds under the prescribed regulations. This is because the courts are themselves a mere cog in the workings of the ruling regime, which claims total power over the economy. Any private-property owner who is foolish enough to seek judicial relief from the impositions of the state quickly arouses the ire of state functionaries who have unlimited means to retaliate for any fleeting victories he might obtain.<br /><h2>4. Fascism and the Motivation Problem </h2>Although enforceable property rights are nonexistent, and titular "ownership" is insecure, the fascist system still avoids the crude problems of motivation experienced under egalitarian variants of socialism (e.g., communism). By allowing inequalities in the nominal ownership of property and the consumption that is contingent on this nominal ownership, the state allows incentives for the acquisition of private property to remain, even though this ownership is subordinate to the whims of the state rulers.<br />This observation may seem to contradict the previous assertion that the private capitalist is only the <i>illusory</i> owner of the property to which he holds title. However, no contradiction exists: although the prerogatives of ownership <i>ultimately</i> accrue to the state under fascism, this does not prevent the private capitalist from enjoying additional <i>consumption</i> if he is the nominal owner of property. Consumption is consumption, and once a resource is consumed by its nominal owner, or otherwise used for his immediate benefit, the state cannot exercise its de facto ownership to prevent this, no matter how authoritarian it may be.<br />In fact, the acquisition of private property under fascism, even while subordinated to the state, offers more than just consumption benefits. Although all private capitalists are subject to the political power of the state rulers, large capitalists can use the residual economic power they maintain to capture smaller units of political power, particularly in the lower echelons of the bureaucratic apparatus. Reimann explains the interaction between political and economic power in Nazi Germany as follows:<br /><blockquote>The authoritarian position of the provincial and local bureaucrats — and the degree to which the local Party bureaucracy is independent of industrialists and businessmen — varies with the social structure in different sections of the country. In districts where big industrial magnates have direct relations with the top flight of Party leaders, the local bureaucracy is largely dependent on — in some cases, a tool of — the big concern or trust. In districts where only small and medium-sized firms exist, however, the Party bureaucracy is much more authoritarian and independent. A dual power exists under fascism: the indirect power of money and the direct power of the Party leader.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note10" name="ref10">[10]</a></blockquote>Thus, under fascism, there remains a large incentive for the acquisition of private property. Although the private capitalist has no enforceable property rights against the state, he can protect his titular ownership and subsidiary control of property by acquiring political power. His control over property, even though it is at the mercy of the state, can allow him to capture some of the political power of the state, which can in turn protect his control. If he is a small private capitalist, the local bureaucrats will be his masters, and he will be forced to pay endless tribute to them merely to survive. However, if his business concern is large and profitable, he may be able to form relationships with more powerful political figures, thereby acquiring <i>political</i> influence, and bringing himself within the ambit of the state apparatus.<br />The motivation problem in fascism is therefore of a different and more subtle form than the motivation problem in egalitarian socialist systems. Under fascism, the private citizen is at the mercy of the state, which can take his nominally held property from him at any time. He is therefore motivated to consume more of his property than he otherwise would, and to use his savings to buy political influence, rather than engaging in productive endeavors. He is motivated, in short, to engage in <i>political</i> rather than <i>economic</i> entrepreneurialism.<br /><h2>5. The Rise of Political Entrepreneurialism </h2>Under fascism, businessmen may continue to work within the regulatory regime, eking out whatever living they can maintain under the arbitrary decrees of the state bureaucracies. But in order to do so they must seek to obtain influence over the state functionaries in order to survive unmolested. Under fascist regimes that have historically existed, this has given rise to large investments in maintaining good relations with the state, employing "contact men" with connections to politically powerful members of the fascist regime. For example, under the fascist economic system of Nazi Germany such "contact men" became a crucial part of any business concern:<br /><blockquote>The business organization of private enterprise has had to be reorganized in accordance with the new state of things. Departments which previously were the heart of a firm have become of minor importance. Other departments which either did not exist or which had only auxiliary functions have become dominant and have usurped the real functions of management.</blockquote><blockquote>Formerly the purchasing agent and the salesmanager were among the most important members of a business organization. Today the emphasis has shifted and a curious new business aide, a sort of combination "go between" and public relations counsel, is now all-important. His job — not the least interesting outgrowth of the Nazi economic system — is to maintain good personal relations with officials in the Economic Ministry, where he is an almost daily caller … <a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note11" name="ref11">[11]</a></blockquote>As with political lobbying in the mixed economy, this heavy investment in influence over the state bureaucracies is used by businesses both for protection from the state itself and to obtain special privilege. Having invested successfully in political influence, a successful business enterprise will seek to use the state as a buyer of its products or services, and will seek to use state power to destroy its competitors. Economic and political powers jostle for control in this system, and large business entities can come to dominate smaller political units, with businessmen becoming powerful political entrepreneurs in the regime.<br />This interaction between political and economic power under fascism is very similar to that which exists in highly interventionist industries in the mixed economy. In the latter case, problems of regulatory capture are well known, and it is common for large firms to use their connections with the state to obtain special privileges. This leads to a concentration of economic power in a few large firms, who are able to rely on government contracts to boost their income, while at the same time using captured regulatory bodies as a means to block smaller competitors from their market.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note12" name="ref12">[12]</a><br />If the level of state intervention in such a system increases, government contracts and captured regulatory bodies become more and more valuable, and more effort is shifted away from productive activities and toward the capture of political power. In short, as interventionism grows, and the economic system moves toward fascism, firms will shift their efforts away from <i>economic</i> entrepreneurialism and toward <i>political</i> entrepreneurialism.<br />Under the pure fascist system, state intervention is ubiquitous, and connections and influence in the state apparatus become all important for business. Instead of productive success and economic entrepreneurialism, <i>political</i> entrepreneurialism becomes the means to acquiring wealth, and protecting it from state predation. Any firm that fails to forge state connections or find an adequate contact man will be forced out of business, while a few big firms with strong political connections will come to dominate the market.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note13" name="ref13">[13]</a><br />At the same time, political figures in the regime take advantage of their political power to become wealthy private capitalists themselves. High-ranking members of the ruling regime are able to exercise their political power to favor their own business interests and expand their economic power as private capitalists.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note14" name="ref14">[14]</a><br />Over a period of time, this process means that productive firms and economic entrepreneurs are destroyed, while unproductive (parasitic) enterprises run by political entrepreneurs take their place. Reimann explains the outcome in Nazi Germany:<br /><blockquote>[The genuinely independent businessman] is disappearing but another type is prospering. He enriches himself through his Party ties; he is himself a Party member devoted to the Fuehrer, favoured by the bureaucracy, entrenched because of family connections and political affiliations. In a number of cases, the wealth of these Party capitalists has been created through the Party's exercise of naked power. It is to the advantage of these capitalists to strengthen the Party which has strengthened them.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note15" name="ref15">[15]</a></blockquote>The fascist economic system causes a convergence of economic and political power, both through the politicization of existing private capitalists, and the enrichment of political figures. The attempt to form a partnership between business and state eventually leads to a situation where business <i>is</i> the state, and the state <i>is</i> business. The resulting system is fittingly described by what philosopher Ayn Rand called the "aristocracy of pull."<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note16" name="ref16">[16]</a> Under this system, business enterprises are run by an entrenched class of politically privileged capitalists, with little prospect of outside competition.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note17" name="ref17">[17]</a><br /><h2>6. Why Corruption Is <i>Not</i> the Problem </h2>It is worth noting that the breakdown of the rule of law under the fascist system means that corruption of the legal and bureaucratic system is likely to be rampant. However, it is not law<i>breaking</i> that is the problem — the problem is the law itself.<br />The fascist system empowers the state to intervene in all aspects of business, violating property rights at will. Its repudiation of free-market capitalism means that central planners are expected to take an active part in running the economy and cannot merely stand back and leave business alone (at least not without implicitly repudiating the fascist system). This interventionism means that considerations of property rights must necessarily be replaced by the amorphous notion of the "public good" (however this happens to be expressed), creating conditions where business success is determined primarily by influencing the judgment of bureaucrats and powerful political figures.<br />Because property rights have been discarded, political entrepreneurialism becomes crucial to success, <i>regardless</i> of whether bureaucrats are "corrupt." It occurs whether bureaucrats exercise their judgment in a transparent and impartial manner, or sell their power directly to wealthy business entities. It is not the corruption of bureaucrats that is the problem; it is the fact that there is no <i>honest</i> way to dole out special favors to business under a system in which the state has total control.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note18" name="ref18">[18]</a><br /><h2>7. Information and Calculation Problems in the Fascist Commonwealth </h2>The rise of political entrepreneurialism is not the only problem with the fascist economy. It is augmented by the standard information and calculation problems of socialism, stemming from the lack of any genuine private ownership and the extensive price and wage controls imposed by the state.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note19" name="ref19">[19]</a> (Even if price and wage controls are absent, prices and wages will be heavily distorted by state interventions in the economy, so that these prices are not commensurate to the true costs of resources.)<br />As with other variants of socialism, the economic exchanges in the fascist economy are <i>not</i> driven by the preferences of consumers or the requirements of productive entrepreneurs. Instead, the exchange of goods proceeds, mimicking the market economy in some respects, but the price system reflects the extensive price and wage controls of the fascist state, or, in the absence of price controls, the distorting effects of its other interventions. This means that the central-planning bureaucrats in the fascist state are unable to determine the true value of resources. They distort the prices of goods to such an extent that rational allocation of resources becomes impossible. Misallocations of resources occur as prices of good are artificially suppressed or inflated.<br />At best, the central planners can increase output for favored businesses or areas of the economy at the expense of other businesses and areas of the economy, while at the same time destroying the very price system that allows entrepreneurs to calculate rationally under the free market. Since they have no method to objectively value competing projects, their interventions will involve a misallocation of resources compared with the free-market case, and will frequently involve an aggregated loss of resources even <i>ignoring</i> opportunity costs. Thus, despite any pretensions to the contrary, the state is unable to increase total economic output through its central planning; instead, it destroys the price system and causes loss.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note20" name="ref20">[20]</a> This gradually leads to economic decline.<br /><h2>8. Economic Decline and the Incentives of the Ruling Elite </h2>The forgoing analysis of the motivations of businessmen and the economic ineptitude of the central-planning apparatus is pregnant with obvious economic conclusions. The more authoritarian the economic system becomes, the more valuable is the capture of political power and the less valuable is the expansion of productive capacity. All other things being equal, the authoritarian system will lead businessmen (and others) to shift their efforts away from production and toward the acquisition of political power.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note21" name="ref21">[21]</a><br />The result is obvious: under an authoritarian system, political entrepreneurialism increases, and production decreases. This further politicizes the economy and leads to ever-greater distortions of prices, making rational calculation impossible. As authority over the means of production grows, more and more people compete more and more ferociously through the political process for a smaller total economic output. With no genuine conception of property rights to guide them, there is no moral impediment to the coveting of property that is "owned" by others, and there is no legal impediment to its capture.<br />It is again worth noting that this is merely the most extreme manifestation of the economic effects of interventionism in the mixed economy. Since fascism is, in essence, a system of hyperinterventionism, the economic effects of the fascist system are merely the logical extremes of smaller "pragmatic" interventionist programs. Each intervention in a mixed economy distorts prices, misallocates resources to unproductive endeavors, and results in a net loss of production.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note22" name="ref22">[22]</a> At the same time intervention increases the value of political influence and thereby shifts effort from production to political lobbying.<br />With enough political intervention in the economy, this culminates in economic stagnation, then net capital consumption, and, finally, economic collapse, occurring when capital supplies become insufficient to sustain basic services. As this process occurs, parasitic groups in the system suck as much as possible from the dying economy, with their parasitic activities becoming increasingly frantic as the economy collapses and the resources available for capture become scarcer.<br />The problems with the fascist economic system become more and more clear, but there is no incentive for those in control of the state apparatus to avoid the approaching disaster. Since the only antidote to the problem is liberalization of the economy from state control, the cure for the economic decline threatens the personal livelihoods of the state bureaucrats and the ideological program of the higher-level members of the ruling regime.<br />Of course, it is true that sustained economic decline will eventually threaten the position of the ruling elite, particularly since they must make some appeals to the "public good" in their efforts to maintain their own power. However, their situation is threatened far more directly and far more immediately by the <i>cure</i> for economic decline than from the decline itself.<br /><blockquote>The authoritarian State breeds irresponsibility on the part of this ever-growing and legally privileged group. Their position is secure — unless they are purged by their own friends, often as a result of rivalries — whereas the general economy is insecure. They do no work which adds goods or social services to the market. <i>Their job is: to hold their job</i>. The rest of the community finds itself serving as the hardworking host upon which the bureaucratic clique is feeding and fattening.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note23" name="ref23">[23]</a></blockquote>We therefore see the most terrifying aspect of the fascist system. The problem is not merely that its authoritarian controls destroy the economy in the long-term. The greater problem is that as this process occurs, the authoritarian system undermines the human capital of the society it operates on. In particular, it creates a privileged ruling elite who have wrested all economic and political power from the productive capitalists they have expropriated, at the expense of impossible promises to the masses. Their sole incentive is to maintain the parasitic system that gives them power, prestige, and money — and they will do anything to keep it, even as they watch the general economy collapse into ruin.<br /><h2>9. The Drive to War </h2>The economic decline ensuing from state intervention, misallocation of resources, and rising political entrepreneurialism must eventually lead to a crisis of confidence in the state, if not deflected by some nationalistic endeavor to rouse the support of the public and instill them with some alternative fear. Even the most authoritarian regime must rely on compliance from the public to maintain its power, and so it is natural that the fascist state will turn to war and conquest as its economic problems become a threat to its rule.<br />War and conquest serve three main purposes for the fascist state. Firstly, notwithstanding its risks, war promises the possibility of conquered territories to serve as resource cash cows for the declining economy. Secondly, the presence of an external military threat allows the ruling elite to rationalize their authoritarian rule and expand their domestic power over the public, while imbuing them with nationalist fervor. Finally, the threat of death and ruin from real or alleged foreign enemies makes the predations of the state look to many of its citizens like the lesser of two evils, and so the discontent of the public is directed to an alternative source.<br />This drive to war is a logical consequence of the ideology and economic program of fascism and interventionism more generally. It is no accident that fascist ideology promotes war as an energizing and righteous endeavor. Because the domestic policies of the authoritarian state revolve around appeals to nationalistic ideals (e.g., the "public good"), militarism is a natural corollary, and it is easy for the state to rouse the public to war.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note24" name="ref24">[24]</a><br />Of course, war is economically destructive, and more rapidly so than domestic intervention. It involves a massive reallocation of resources to military projects, a full or partial withdrawal from the international division of labor,<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note25" name="ref25">[25]</a> and the direct destruction of resources by enemy forces. Moreover, war involves the risk of military defeat, a prospect that usually ends the rule of the existing political elite. Nevertheless, it is the only option for a ruling class that has repudiated liberalism and hitched its reputation to the fascist system of authoritarian control. In describing the motivation of the Nazis in World War II, Reimann explains that<br /><blockquote>Nazi leaders in Germany do not fear possible national economic ruin in wartime. They feel that, whatever happens, they will remain on top, that the worse matters become, the more dependent on them will be the propertied classes. And if the worst comes to the worst, they are prepared to sacrifice all other interests to maintain their hold on the State. If they themselves go, they are ready to pull the temple down with them.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note26" name="ref26">[26]</a></blockquote>Or, as Nazi propaganda minister Joseph Goebbels expressed it in his diary,<br /><blockquote>The war made possible for us the solution of a whole series of problems that could never have been solved in normal times.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note27" name="ref27">[27]</a></blockquote>For those outside the ruling elite, there is a sense of inevitability to the whole process, from economic decline to war. They are stripped of any genuine property rights and exist at the mercy of the state and its functionaries. They are devoid of economic or political power, and are mere pawns in the machinations of the fascist state and its leaders.<br /><blockquote>The fatalism which was typical of the spirit of the German businessman before Europe was plunged into [World War II] was not due to economic difficulties alone, but far more to a feeling that he had become part of a machine inexorably leading him to disaster.<a class="noteref" href="http://mises.org/daily/5963/The-Vampire-Economy-and-the-Market#note28" name="ref28">[28]</a></blockquote><h2>10. Concluding Remarks </h2><div class="book-ad" id="5850-ad"><div class="book-img"><a href="http://mises.org/store/Product.aspx?ProductId=5850" title="Mainspring of Human Progress"><img alt="Mainspring of Human Progress" border="0" src="http://mises.org/store/Assets/ProductImages/SS514.jpg" /></a> </div><div class="book-price"><a href="http://mises.org/store/Product.aspx?ProductId=5850"><span class="line-through">$14.00</span> $12.00</a></div></div>The economic system of fascism is economically unviable in the long run, and what is true of this most extreme manifestation of hyperinterventionism is true, to a lesser extent, of any interventionist system of government. The central planning of the state and the concomitant destruction of private-property rights destroy the independent businessman and replace him with a parasitic impostor, the political entrepreneur, who succeeds by special privilege rather than by economic production.<br />The vast power of the state leads to a convergence of all economic and political power into a small elite of political entrepreneurs, who will hold on to their power and privilege at the expense of the general economy. Combined with all-pervading regulations, price and wage controls, and other distortions of prices under state central planning, this leads to economic stagnation, then economic decline and collapse.<br />The long-run result of the fascist or interventionist economic systems is the drive toward war and conquest, with the ruling class desperately seeking to maintain its power at all costs, even if the cost is the complete destruction of the nation. The endpoint is tyranny, death, and destruction.</div></div></div>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0tag:blogger.com,1999:blog-8977275512937132864.post-13193990584953490202012-03-20T08:57:00.002-07:002012-03-20T08:57:11.442-07:00Why Is the Story About Malia Obama Vacationing in Mexico Disappearing from the Web?<br /><ul class="tools" sizcache="0" sizset="2"><li class="posted" sizcache="0" sizset="2">Posted on March 19, 2012 at 5:45pm by <img alt="Erica Ritz" class="photo" height="17px" src="http://www.theblaze.com/wp-content/uploads/userphoto/ericaritz.thumbnail.jpeg" width="17px" /> <a href="http://www.theblaze.com/blog/author/ericaritz" rel="author" target="_self">Erica&nbsp;Ritz</a> </li><li class="print"><a href="javascript:window.print();" target="_self">Print »</a> </li><li class="email"><a href="mailto:?subject=TheBlaze.com%20-%20Why%20Is%20the%20Story%20About%20Malia%20Obama%20Vacationing%20in%20Mexico%20Disappearing%20from%20the%20Web%3F&amp;body=I%20thought%20you%20would%20like%20this%20story%20from%20TheBlaze.com%0A%0Ahttp://www.theblaze.com/stories/why-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web/" target="_self">Email »</a> </li></ul><ul class="social-tools"><li class="facebook"><like class=" fb_edge_widget_with_comment fb_iframe_widget" font="" href="http://www.theblaze.com/stories/why-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web/" layout="button_count" send="true" show_faces="false" width="90"><span><iframe allowtransparency="true" class="fb_ltr" frameborder="0" id="f25ee26f6d7ae28" name="f3db845176334d2" scrolling="no" src="http://www.facebook.com/plugins/like.php?channel_url=https%3A%2F%2Fs-static.ak.fbcdn.net%2Fconnect%2Fxd_proxy.php%23cb%3Df2880ea812a8b12%26origin%3Dhttp%253A%252F%252Fwww.theblaze.com%252Ff356fa062a74cc%26relation%3Dparent.parent%26transport%3Dflash&amp;extended_social_context=false&amp;href=http%3A%2F%2Fwww.theblaze.com%2Fstories%2Fwhy-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web%2F&amp;layout=button_count&amp;locale=en_US&amp;node_type=1&amp;sdk=joey&amp;send=true&amp;show_faces=false&amp;width=150" style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; height: 20px; width: 150px;" title="Like this content on Facebook."></iframe></span></like></li><li class="google"><plusone href="http://www.theblaze.com/stories/why-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web/" size="medium"></plusone></li><li class="twitter"><iframe allowtransparency="true" class="twitter-share-button twitter-count-horizontal" frameborder="0" scrolling="no" src="http://platform.twitter.com/widgets/tweet_button.1331751378.html#_=1332258881920&amp;count=horizontal&amp;id=twitter-widget-0&amp;lang=en&amp;original_referer=http%3A%2F%2Fwww.theblaze.com%2Fstories%2Fwhy-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web%2F&amp;size=m&amp;text=Why%20Is%20the%20Story%20About%20Malia%20Obama%20Vacationing%20in%20Mexico%20Disappearing%20from%20the%20Web%3F&amp;url=http%3A%2F%2Fwww.theblaze.com%2Fstories%2Fwhy-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web%2F&amp;via=theblaze" style="height: 20px; width: 116px;" title="Twitter Tweet Button"></iframe></li><li class="comments"><a href="http://www.theblaze.com/stories/why-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web/#comments" target="_self">Comments <span class="num">(723)</span></a> </li></ul><div class="clearfix" id="postContent" sizcache="0" sizset="3"><hr /><strong>UPDATE: The Administration has just responded to the disappearing stories.</strong><br /><a href="http://www.theblaze.com/stories/white-house-admits-to-asking-news-agencies-to-pull-malia-obama-vacation-story/" target="_self">Read it here</a>.<br /><hr />Have you heard that Malia Obama, the president’s daughter, is <a href="http://www.dailymail.co.uk/news/article-2117288/Malia-Obama-heads-Mexico-SCHOOL-TRIP--brings-25-Secret-Service-agents-her.html?ito=feeds-newsxml" target="_blank" title="reportedly">reportedly</a> spending her spring break in Oaxaca, Mexico? Allegedly, she’s jetting off with some of her classmates and 25 Secret Service agents to a country that the State Department has said <span style="text-decoration: underline;"><a href="http://travel.state.gov/travel/cis_pa_tw/tw/tw_1764.html" target="_blank">all Americans </a><a href="http://travel.state.gov/travel/cis_pa_tw/tw/tw_5665.html" target="_blank">should avoid</a></span>. But something is different about the latest “<a href="http://www.theblaze.com/stories/judicial-watch-files-suit-to-obtain-michelle-obamas-vacation-records/" target="_self" title="Obama vacation controversy">Obama vacation controversy</a>:” references to it are disappearing from the Internet — and fast.<br />Around 3:00 EST, a <a href="http://www.telegraph.co.uk/news/worldnews/barackobama/9152796/Malia-Obama-guarded-by-25-Secret-Service-agents-on-spring-break-in-Mexico.html#.T2dop_0nrg0.email" target="_blank" title="Telegraph">Telegraph</a> story reporting on the event was the first to vanish (note how the url remains the same in the “before” and “after”):<br /><div class="wp-caption aligncenter" id="attachment_269990" sizcache="0" sizset="3" style="width: 630px;"><a href="http://www.theblaze.com/stories/why-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web/screen-shot-2012-03-19-at-3-30-38-pm/" rel="attachment wp-att-269990" sizcache="0" sizset="3" target="_self"><img alt="Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web" class="size-large wp-image-269990 " height="426px" loaded="false" src="http://www.theblaze.com/wp-content/uploads/2012/03/Screen-shot-2012-03-19-at-3.30.38-PM-620x426.png" title="Malia Mexico Telegraph Screen Shot" width="620px" /></a> <div class="wp-caption-text">Before</div></div><div class="wp-caption aligncenter" id="attachment_269991" sizcache="0" sizset="4" style="width: 630px;"><a href="http://www.theblaze.com/stories/why-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web/screen-shot-2012-03-19-at-3-33-21-pm/" rel="attachment wp-att-269991" sizcache="0" sizset="4" target="_self"><img alt="Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web" class="size-large wp-image-269991 " height="427px" loaded="false" src="http://www.theblaze.com/wp-content/uploads/2012/03/Screen-shot-2012-03-19-at-3.33.21-PM-620x427.png" title="Telegraph After Malia Mexico" width="620px" /></a> <div class="wp-caption-text">After</div></div>Then, the related <a href="http://www.huffingtonpost.com/2012/03/19/malia-obama-mexico-spring-break_n_1364063.html" target="_blank" title="Huffington Post">Huffington Post</a> article was found to be linking back to a completely unrelated <a href="http://news.yahoo.com/obamas-daughter-spends-springbreak-mexico-145031176.html" target="_blank" title="Yahoo News">Yahoo News</a> page titled “Senegal Music Star Youssou Ndour Hits Campaign Trail.”<br />The <a href="http://www.huffingtonpost.com/2012/03/19/malia-obama-mexico-spring-break_n_1364063.html" target="_blank" title="Huffington Post">Huffington Post</a> article:<br /><div sizcache="0" sizset="5"><a href="http://www.theblaze.com/stories/why-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web/screen-shot-2012-03-19-at-3-38-13-pm/" rel="attachment wp-att-269994" sizcache="0" sizset="5" target="_self"><img alt="Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web" class="aligncenter size-large wp-image-269994" height="424px" loaded="false" src="http://www.theblaze.com/wp-content/uploads/2012/03/Screen-shot-2012-03-19-at-3.38.13-PM-620x424.png" title="Huffpo Malia Mexico" width="620px" /></a></div>Links to <a href="http://news.yahoo.com/obamas-daughter-spends-springbreak-mexico-145031176.html" target="_blank" title="this site">this site</a>:<br /><div sizcache="0" sizset="6"><a href="http://www.theblaze.com/stories/why-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web/screen-shot-2012-03-19-at-3-39-47-pm/" rel="attachment wp-att-269995" sizcache="0" sizset="6" target="_self"><img alt="Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web" class="aligncenter size-large wp-image-269995" height="407px" loaded="false" src="http://www.theblaze.com/wp-content/uploads/2012/03/Screen-shot-2012-03-19-at-3.39.47-PM-620x407.png" title="Yahoo News Malia Mexico" width="620px" /></a></div>The Yahoo News story that HuffPo links to makes no mention of Malia Obama or her Mexican vacation. This raises two possibilities: either HuffPo has made an error in its link, or Yahoo has also removed its “Malia in Mexico” story. The latter more likely considering that the “-obamas-daughter-spends-springbreak-in-Mexico” url is still present in the Yahoo story.<br />And now, the <a href="https://www.google.com/search?q=define%3A+ominous&amp;ie=utf-8&amp;oe=utf-8&amp;aq=t&amp;rls=org.mozilla:en-US:official&amp;client=firefox-a#sclient=psy-ab&amp;hl=en&amp;client=firefox-a&amp;rls=org.mozilla:en-US%3Aofficial&amp;q=malia+obama+mexico&amp;oq=malia+obama+mexico&amp;aq=f&amp;aqi=&amp;aql=&amp;gs_sm=3&amp;gs_upl=3794933l3802730l0l3803900l31l13l7l4l5l1l434l2891l0.1.5.2.2l15l0&amp;gs_l=serp.3...3794933l3802730l0l3803900l31l13l7l4l5l1l434l2891l0j1j5j2j2l15l0.frgbld.&amp;pbx=1&amp;bav=on.2,or.r_gc.r_pw.,cf.osb&amp;fp=819ae573455b8965&amp;biw=1440&amp;bih=739" target="_blank">link to the Huffington Post article on Google</a> redirects to the site’s main page; the page itself is gone.<br />In addition to larger news organizations, smaller sites are also removing their stories.<br /><div class="inline-ad" sizcache="0" sizset="7"><!-- begin ad tag --><a href="http://ad.doubleclick.net/click;h=v8/3c3e/0/0/%2a/u;254676351;0-0;1;58127817;4307-300/250;46206347/46223440/1;u=prntype*web!prngenre*conservative_talk!radium1*yes!prnpage*interior!pos*bottom!sz*300x250;~sscs=%3fhttp://www.mysolarbackup.com/?utm_source=GBeck_300x250_MSB_Jan11&amp;utm_medium=GBeck_300x250_MSB_Jan11&amp;utm_campaign=GBeck_300x250_MSB_Jan11" sizcache="0" sizset="7" target="_blank"><img alt="Click here to find out more!" border="0" loaded="false" src="http://s0.2mdn.net/viewad/3123402/0116_300x250Beck.jpg" /></a> <noscript></noscript><!-- end ad tag --></div><br /><a href="http://www.freerepublic.com/focus/f-news/2860977/posts" target="_blank" title="Free Republic">Free Republic</a> removed a related discussion thread:<br /><div sizcache="0" sizset="8"><a href="http://www.theblaze.com/stories/why-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web/screen-shot-2012-03-19-at-3-43-54-pm/" rel="attachment wp-att-269999" sizcache="0" sizset="8" target="_self"><img alt="Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web" class="aligncenter size-large wp-image-269999" height="537px" loaded="false" src="http://www.theblaze.com/wp-content/uploads/2012/03/Screen-shot-2012-03-19-at-3.43.54-PM-620x537.png" title="Free Republic Malia Mexico" width="620px" /></a></div>And <a href="https://www.google.com/search?q=global+grind&amp;ie=utf-8&amp;oe=utf-8&amp;aq=t&amp;rls=org.mozilla:en-US:official&amp;client=firefox-a" target="_blank" title="&quot;Global Grind&quot;">“Global Grind”</a> removed its related article:<br /><div sizcache="0" sizset="9"><a href="http://www.theblaze.com/stories/why-is-the-story-about-malia-obama-vacationing-in-mexico-disappearing-from-the-web/screen-shot-2012-03-19-at-3-51-07-pm/" rel="attachment wp-att-270003" sizcache="0" sizset="9" target="_self"><img alt="Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web" class="aligncenter size-large wp-image-270003" height="321px" loaded="false" src="http://www.theblaze.com/wp-content/uploads/2012/03/Screen-shot-2012-03-19-at-3.51.07-PM-620x321.png" title="Global Grind" width="620px" /></a></div>Of these sites, the only one to state a reason for the change was “Free Republic,“ where the Admin wrote ”Leave the kids alone.”<br />So that raises the question: Why were all of these sites taken down? Is the story false? Were they removed for security reasons?<br />Consider that the story still <a href="http://www.theaustralian.com.au/travel/news/barack-obamas-elder-daughter-is-spending-her-springbreak-in-mexican-city-oaxaca/story-e6frg8ro-1226304738456" target="_blank">lives (as of this publication)* on the site of The Australian</a>, which uses a story from the well-respected AFP (a sort of Associated Press for France):<br /><div sizcache="0" sizset="10"><a href="http://www.theblaze.com/wp-content/uploads/2012/03/AFP-obama-article.jpg" sizcache="0" sizset="10" target="_self"><img alt="Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web" class="aligncenter size-large wp-image-270145" height="620px" loaded="false" src="http://www.theblaze.com/wp-content/uploads/2012/03/AFP-obama-article-573x620.jpg" title="AFP obama article" width="573px" /></a></div>So far, no outlets have explained why the stories have been removed. It will be interesting to see if they do.<br /><strong><em>The Blaze’s Jonathon M. Seidl contributed to this report. </em></strong><br /><em>*The Australian has since removed its article.</em><br /><strong>UPDATE</strong>:<br /><a href="http://www.buzzfeed.com/mckaycoppins/how-agence-france-press-ruined-malia-obamas-vacat?s=mobile" target="_blank" title="Buzzfeed">Buzzfeed</a> is now reporting that it is a “long tradition” not to report on presidential kids’ vacation plans, citing this as the possible reason for the many unexplained retractions.<br />If this is the case, it still raises questions as to why Malia was allowed to vacation in a country that the State Department recommends no American travels to.<br />Neither AFP nor the White House responded to Buzzfeed’s <a href="http://www.buzzfeed.com/mckaycoppins/how-agence-france-press-ruined-malia-obamas-vacat" target="_blank" title="Request">request</a> for comment.<br /><strong>UPDATE II</strong>:<br />The Montreal Gazette has now posted the story of the vacation. It’s one of the only sites that is reporting on it. Interestingly, the story is actually attributed to the AFP (mentioned above). You can read it <a href="http://www.montrealgazette.com/travel/Obama+daughter+spends+spring+break+Mexico/6323773/story.html" target="_blank">here</a>.</div>Dr Ghttps://plus.google.com/110027074384450862611noreply@blogger.com0